| <html> | |
| <title> - MAKING WASHINGTON WORK FOR AMERICA'S SMALL BUSINESSES</title> | |
| <body><pre> | |
| [House Hearing, 115 Congress] | |
| [From the U.S. Government Publishing Office] | |
| MAKING WASHINGTON WORK FOR AMERICA'S SMALL BUSINESSES | |
| ======================================================================= | |
| HEARING | |
| before the | |
| COMMITTEE ON SMALL BUSINESS | |
| UNITED STATES | |
| HOUSE OF REPRESENTATIVES | |
| ONE HUNDRED FIFTEENTH CONGRESS | |
| FIRST SESSION | |
| __________ | |
| HEARING HELD | |
| MARCH 22, 2017 | |
| __________ | |
| [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] | |
| Small Business Committee Document Number 115-010 | |
| Available via the GPO Website: www.fdsys.gov | |
| ______ | |
| U.S. GOVERNMENT PUBLISHING OFFICE | |
| 24-673 WASHINGTON : 2017 | |
| ----------------------------------------------------------------------- | |
| For sale by the Superintendent of Documents, U.S. Government Publishing | |
| Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; | |
| DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, | |
| Washington, DC 20402-0001 | |
| HOUSE COMMITTEE ON SMALL BUSINESS | |
| STEVE CHABOT, Ohio, Chairman | |
| STEVE KING, Iowa | |
| BLAINE LUETKEMEYER, Missouri | |
| DAVE BRAT, Virginia | |
| AUMUA AMATA COLEMAN RADEWAGEN, American Samoa | |
| STEVE KNIGHT, California | |
| TRENT KELLY, Mississippi | |
| ROD BLUM, Iowa | |
| JAMES COMER, Kentucky | |
| JENNIFFER GONZALEZ-COLON, Puerto Rico | |
| DON BACON, Nebraska | |
| BRIAN FITZPATRICK, Pennsylvania | |
| ROGER MARSHALL, Kansas | |
| VACANT | |
| NYDIA VELAZQUEZ, New York, Ranking Member | |
| DWIGHT EVANS, Pennsylvania | |
| STEPHANIE MURPHY, Florida | |
| AL LAWSON, JR., Florida | |
| YVETTE CLARK, New York | |
| JUDY CHU, California | |
| ALMA ADAMS, North Carolina | |
| ADRIANO ESPAILLAT, New York | |
| BRAD SCHNEIDER, Illinois | |
| VACANT | |
| Kevin Fitzpatrick, Staff Director | |
| Jan Oliver, Chief Counsel | |
| Adam Minehardt, Minority Staff Director | |
| C O N T E N T S | |
| OPENING STATEMENTS | |
| Page | |
| Hon. Steve Chabot................................................ 1 | |
| Hon. Brad Schneider.............................................. 2 | |
| WITNESSES | |
| Ms. Maxine Turner, Founder, Cuisine Unlimited, Salt Lake City, | |
| UT, testifying on behalf of the U.S. Chamber of Commerce....... 5 | |
| Ms. Ann Chambers, Co-Founder and CEO, Red212, Cincinnati, OH, | |
| testifying on behalf of Women Impacting Public Policy.......... 6 | |
| Mr. Rutland ``Skip'' Paal, Owner, Rutland Beard Floral Group, | |
| Baltimore, MD, testifying on behalf of the Society of American | |
| Florists....................................................... 8 | |
| Mr. David Borris, Owner, Hel's Kitchen Catering, Northbrook, IL, | |
| testifying on behalf of the Main Street Alliance............... 9 | |
| APPENDIX | |
| Prepared Statements: | |
| Ms. Maxine Turner, Founder, Cuisine Unlimited, Salt Lake | |
| City, UT, testifying on behalf of the U.S. Chamber of | |
| Commerce................................................... 23 | |
| Ms. Ann Chambers, Co-Founder and CEO, Red212, Cincinnati, OH, | |
| testifying on behalf of Women Impacting Public Policy...... 30 | |
| Mr. Rutland ``Skip'' Paal, Owner, Rutland Beard Floral Group, | |
| Baltimore, MD, testifying on behalf of the Society of | |
| American Florists.......................................... 38 | |
| Mr. David Borris, Owner, Hel's Kitchen Catering, Northbrook, | |
| IL, testifying on behalf of the Main Street Alliance....... 44 | |
| Questions for the Record: | |
| None. | |
| Answers for the Record: | |
| None. | |
| Additional Material for the Record: | |
| None. | |
| MAKING WASHINGTON WORK FOR AMERICA'S SMALL BUSINESSES | |
| ---------- | |
| WEDNESDAY, MARCH 22, 2017 | |
| House of Representatives, | |
| Committee on Small Business, | |
| Washington, DC. | |
| The Committee met, pursuant to call, at 11:00 a.m., in Room | |
| 2360, Rayburn House Office Building, Hon. Steve Chabot | |
| [chairman of the Committee] presiding. | |
| Present: Representatives Chabot, Luetkemeyer, Kelly, Blum, | |
| Bacon, Evans, Murphy, Lawson, Clarke, Adams, Espaillat, and | |
| Schneider. | |
| Chairman CHABOT. Good morning. I call this hearing to | |
| order. And I want to thank everyone for being here. We | |
| especially appreciate the witnesses' time being taken from | |
| their businesses, and very significant ones at that. So we | |
| really do appreciate your testimony. | |
| And for those of you who follow our Committee, you know how | |
| relentless we are in our advocacy for America's 28 million | |
| small businesses. We constantly remind folks about how | |
| important small businesses are to the American economy. We | |
| remind people that they make up 99 percent of all firms; that | |
| 48 percent of the people working today work for a small | |
| business; that they account for 46 percent of our gross | |
| national product. We do this because it is important. We have | |
| to continue to shout it from the rooftops because too often | |
| some folks here in Washington take small businesses for | |
| granted. | |
| Take, for instance, the implementation of the Affordable | |
| Care Act, or Obamacare. Small business witness after small | |
| business witness has come before us, and constituent after | |
| constituent back home, and stated how unworkable the whole | |
| thing is. We hear stories of astronomical premium increases, | |
| severely limited choices, and little to no assistance for small | |
| businesses trying to help themselves to get insurance or to | |
| their employees. Yet, there are folks out there who think that | |
| Obamacare is working just fine. Well, it is not, and small | |
| businesses are usually the ones left holding the bag. | |
| Another problem that continually hinders small business | |
| growth is the avalanche of unnecessary and unworkable | |
| regulations. Because of the unique role small businesses have | |
| in the economy, regulations have a substantially higher impact | |
| on them than they do on larger business entities. In fact, a | |
| recent study by the National Association of Manufacturers found | |
| that small firms pay an average of $2,041 more per employee per | |
| year than their larger counterparts. | |
| It does not get any easier for small businesses in the tax | |
| realm either. A study by the Small Business Administration's | |
| Office of Advocacy disclosed that small firms pay 67 percent | |
| more to comply with the Tax Code than do large firms. The | |
| growing number of tax provisions, along with the fact that | |
| small firms frequently do not have an in-house accountant or | |
| tax attorney means that small business owners must hire outside | |
| experts or add duties to another employee's work load, which | |
| that takes time away from their actual contribution towards the | |
| business because they just have to figure out the tax burden. | |
| These issues are important because too often small businesses | |
| get the short end of the stick, which is counterproductive to | |
| the economic health of our Nation. | |
| This hearing is a little bit different than others that we | |
| have done. Instead of focusing on just one topic as we usually | |
| do, we simply asked the witnesses to give us advice on the | |
| policies and initiatives that we could be focusing on to help | |
| them the most. By getting input now, we can focus our efforts | |
| throughout the 115th Congress to serve our constituency, which | |
| are small businesses, as responsibly and as effectively as | |
| possible. | |
| We have an excellent panel, as I mentioned before of | |
| witnesses here today, and I again want to make note of how | |
| important it is that you are all with us. | |
| And I would now like to yield to the gentleman from | |
| Illinois, Mr. Schneider. Ms. Velazquez, who is usually here, is | |
| unable to be here this morning, so Mr. Schneider is filling in. | |
| Mr. SCHNEIDER. Thank you, Mr. Chairman. Thank you for | |
| calling this hearing. I, too, want to thank the witnesses for | |
| taking the time to be here. | |
| There are nearly 30 million small businesses in the United | |
| States representing more than 99 percent of all businesses. | |
| These small firms employ nearly 50 percent of all private | |
| sector employees in the United States. At the same time, 1 out | |
| of every 10 Americans are self-employed, and another 7 percent | |
| of American workers are actively trying to start a business. | |
| These trailblazers, both new entrepreneurs and small growing | |
| firms, animate the American economy. They take great risks by | |
| launching new ventures, developing new products, establishing | |
| new industries, and ultimately spurring job growth. | |
| As we look to foster and encourage this type of risk-taking | |
| and entrepreneurship, there are a range of policy areas that | |
| come into play. Federal regulation, for example, is a | |
| fundamental tool of government used to implement public policy. | |
| They serve to protect workers and clarify how our Nation's laws | |
| are implemented. Most regulations serve an important purpose, | |
| like ensuring food is safe to eat and our air and water remain | |
| unpolluted. In fact, according to a recent poll by the American | |
| Sustainable Business Council, Main Street Alliance, and the | |
| small business majority, 86 percent of small business owners | |
| see regulations as a necessary part of our modern economy. | |
| Of course, we must always be mindful of the burdens and | |
| compliance costs certain regulations impose on smaller | |
| companies, but we also must bear in mind that regulations and | |
| regulatory certainty are needed to protect the public health | |
| and can even be necessary for economic growth. | |
| Just as regulations are part of a thriving and modern | |
| economy, so is accessibility to affordable quality health | |
| insurance. Seven years ago, President Obama signed into law the | |
| Affordable Care Act. Since then, about 22 million people have | |
| secured coverage. These gains have been significant for small | |
| business employees as their uninsured rate fell from 27 percent | |
| to less than 20 percent between 2013 and 2015. | |
| The Congressional Budget Office estimates that the | |
| Republican Healthcare Bill, or Trumpcare, would rip away health | |
| insurance from 14 million Americans in the first year alone. | |
| That number jumps to 24 million over a decade, nearly doubling | |
| the share of Americans who are uninsured. | |
| And of particular note for small employers is the | |
| elimination of the Small Business Health Care Tax Credit. | |
| Rather than improving this provision to make it work better for | |
| small firms, Trumpcare simply eliminates it. | |
| Slash-and-burn proposals like this leave little optimism | |
| for making bipartisan headway in other areas like tax reform. | |
| That is unfortunate because I think everyone on this Committee | |
| agrees on the need for reforming our Tax Code. Simplifying the | |
| Tax Code would give small businesses greater certainty and | |
| allow them to spend their time and resources on what they do | |
| best: creating new jobs in their own local communities. | |
| I am grateful that we are here today to learn how Congress | |
| can serve the needs of small businesses and entrepreneurs so | |
| they can help grow our economy. The difficulty will be | |
| identifying tangible, bipartisan solutions we can all get | |
| behind and hopefully implement. In that regard, the small | |
| business community's input will be critical. | |
| This Committee does its best work when we hear firsthand | |
| from small businesses. In that regard, I look forward to | |
| hearing today's testimony. Let me again thank the witnesses, | |
| and I yield back. | |
| Chairman CHABOT. Thank you very much. The gentleman yields | |
| back. | |
| And if Committee members have opening statements prepared, | |
| I would ask that they be submitted for the record. | |
| And I would like to take just a moment to explain our | |
| timing rules in this Committee. It is pretty simple. It is a 5- | |
| minute rule. Each of you will get 5 minutes and then each of us | |
| will get 5 minutes to ask questions. And there is a lighting | |
| system to assist you in staying within the limits. The green | |
| light will be on for 4 minutes. The yellow light will come on | |
| when you have got a minute to wrap up, and then when the red | |
| light comes on, if you could wrap up by then, we would | |
| appreciate it. If you go a little bit over, that would be okay, | |
| but not a lot over. So if you could stay within that we would | |
| greatly appreciate it. | |
| I would now like to introduce our very distinguished panel | |
| here this morning. Our first witness is Maxine Turner, who is | |
| the founder of Cuisine Unlimited in Salt Lake City, Utah. After | |
| 8 years in the financial services industry, Ms. Turner was | |
| asked to join a nonprofit organization in heading their | |
| fundraising catering program. Her interest in events grew from | |
| this experience and she later established Cuisine Unlimited | |
| Catering and Special Events, an award-winning national and | |
| international catering and special event company. Established | |
| in 1980, her company now employs over 120 people. She is | |
| testifying on behalf of the United States Chamber of Commerce | |
| in her capacity as chairperson of their Small Business Council, | |
| and we welcome you here this morning, Ms. Turner. | |
| Our next witness will be Anne Chambers, who is the owner of | |
| Red212 in Cincinnati, Ohio. I will repeat that. In Cincinnati, | |
| Ohio, which happens to be my hometown. Red212 is an independent | |
| content strategy agency that offers digital, traditional, and | |
| cultural solutions. She is testifying on behalf of Women | |
| Impacting Public Policy, WIPP, a national nonpartisan | |
| organization advocating on behalf of women entrepreneurs. Since | |
| its inception in June of 2001, WIPP has reviewed, provided | |
| input, and taken specific positions on many economic issues and | |
| policies which affect the bottom line of its members. And we | |
| thank you also for participating this morning. | |
| And up next is Rutland ``Skip'' Paal, president and CEO of | |
| Rutland Beard Floral Group, RBFG, a fourth generation family- | |
| owned floral business with more than 180 employees across 4 | |
| States. RBFG delivers nearly 100,000 floral orders annually, | |
| and under Skip's leadership and direction the company has grown | |
| over 1,500 percent during the past decade. He currently serves | |
| on the board of directors of the Society for American Florists | |
| and is testifying in that capacity today. We also welcome you | |
| here. | |
| And I would now like to yield to Mr. Schneider, who is not | |
| only filling in for Ms. Velazquez, but is also the ranking | |
| member in his own right for the Agriculture, Energy, and Trade | |
| Subcommittee, for introducing our next witness. | |
| Mr. SCHNEIDER. Thank you. It is always an honor to | |
| introduce an expert witness. It is even a greater honor to | |
| introduce a friend. | |
| David Borris of Hel's Kitchen in Northbrook, Illinois. | |
| David began in 1985 in a 900-square-foot retail storefront with | |
| his wife. Pursuing the American dream, all they wanted to do | |
| was have the opportunity to use their balanced energy and | |
| acquired hospitality skills to offer our community, the North | |
| Shore of Chicago, a new experience in gourmet retail carryout | |
| food. Armed with a handful of amazing family recipes and a | |
| steadfast, unfailing work ethic, they set out to fulfill this | |
| vision. Thirty-two years and three expansions later, Hel's | |
| Kitchen Catering has become a permanent fixture in our | |
| community. What started as a simple dream for two committed | |
| entrepreneurs has become the lifeblood and livelihood for | |
| dozens of employees. | |
| David has been a leader with Main Street Alliance since | |
| 2008. He is a member of the Main Street Alliance Executive | |
| Committee, has represented Main Street Alliance numerous times | |
| in Illinois, and even here in Washington, D.C., on a variety of | |
| issues ranging from health care, job quality, climate justice, | |
| tax reform, incorporation transparency, Wall Street reform, and | |
| more. He understands the issues, he is a good friend, and I am | |
| glad to have you here. Thank you very much. | |
| Chairman CHABOT. Thank you very much. | |
| As I said, we have a very distinguished panel and, Ms. | |
| Turner, you are recognized for 5 minutes. | |
| STATEMENTS OF MAXINE TURNER, FOUNDER, CUISINE UNLIMITED; ANNE | |
| CHAMBERS, CO-FOUNDER AND CEO, RED212; RUTLAND ``SKIP'' PAAL, | |
| OWNER, RUTLAND BEARD FLORAL GROUP; DAVID BORRIS, OWNER, HEL'S | |
| KITCHEN CATERING | |
| STATEMENT OF MAXINE TURNER | |
| Ms. TURNER. Thank you so much. Chairman Chabot, Ranking | |
| Member, thank you so very much for this opportunity to speak | |
| with you today. | |
| My name again is Maxine Turner. I am the founder of Cuisine | |
| Unlimited. We are a catering and special event company in Salt | |
| Lake City, Utah. | |
| My 37-year-old company is now a second generation family- | |
| owned business with 120 employees catering events certainly | |
| locally, nationally, and internationally. We have been involved | |
| with seven Olympic Games, including exclusive cater at USA | |
| House in Athens and Torino. | |
| I represent the U.S. Chamber of Commerce, of which I am on | |
| the board and chairperson of the Small Business Council. I am | |
| honored to speak before you today regarding the critical issues | |
| that affect our small business community. | |
| The Chamber represents the interests of over 3 million | |
| businesses of all sizes, sectors, and regions. The majority of | |
| Chamber members are small firms. In fact, 96 percent have fewer | |
| than 100 employees. Our Small Business Council works to ensure | |
| the views of small businesses are part of the Chamber's | |
| policymaking procedures. | |
| As chair, I have met with hundreds of business owners to | |
| better understand the small business landscape. Over the past | |
| decade there have been many obstacles, including the worst | |
| recession since the Great Depression and a multitude of Federal | |
| mandates that have challenged our very existence. | |
| We want to grow our companies. We find, however, roadblocks | |
| to that opportunity. We want to work with you to change that | |
| course so that we may have the resources to expand and create | |
| new jobs. | |
| Law passage of the Dodd-Frank law may have calmed fears of | |
| another financial meltdown. An unintended consequence of that | |
| law has been limiting small businesses access to capital. My | |
| company was impacted by these over-restrictive credit policies. | |
| We were awarded the exclusive catering contract at our | |
| Performing Arts Center. It required an investment to equip | |
| three kitchens onsite with small wares. We met with several | |
| banks and our SBA representative. We have had four very | |
| successful loans with SBA, all repaid ahead of schedule. | |
| The bottom line, we were turned away by all the banks. How | |
| could we fulfill our obligation to this contract without | |
| financial backing? We looked to other sources and learned of a | |
| grant offered by our city. We applied and received one-third of | |
| the necessary funds. We made due equipping only one of those | |
| kitchens and used the small wares that we had existing in our | |
| catering operation. We used much of our profits from 2016 to | |
| purchase critical items with the hope that 2017 will see us | |
| through any additional challenges. | |
| My story is not unique. It simply should not be this hard | |
| for businesses to get access to the capital they need. | |
| A Small Business Council member, Ashok Krish, is a good | |
| example of how tech firms are struggling to keep up with | |
| staffing needs. Ashok is the owner of Kaizen Technologies in | |
| Edison, New Jersey. There are over 3,000 IT firms in the | |
| tristate area. His needs for highly skilled workers cannot be | |
| met without a reliance on foreign professionals who work under | |
| the H1B visa program. He cannot fill the technical positions he | |
| currently has. | |
| Many of our small business members have voiced concerns | |
| about regulations. From the overtime rule to the fiduciary | |
| rule, the minimum wage, to Affordable Care, we have worked with | |
| policy committees at the Chamber and have testified before your | |
| Committee to try and bring about regulatory reform. | |
| Tom Donahue, in his State of the American Address, said if | |
| we are able to move our economy 2 percent to that 3 percent | |
| growth, that is not a 1 percent increase in performance; it is | |
| a 50 percent increase. Ultimately, growth is not about numbers. | |
| Growth is about people. This growth rate would have an | |
| extraordinary impact on jobs and opportunities, not for just a | |
| few, but for the many. | |
| New opportunities, beginning with tax reform, regulatory | |
| reform, and other priorities should have better result on our | |
| economy. A healthcare program that meets the needs of our | |
| citizens with reasonable costs will spark new optimism. We are | |
| here to support and to work with you, to stroke an economy | |
| where opportunities abound. | |
| Thank you again for this opportunity to speak with you | |
| today, and I look forward to any questions you may have. | |
| Chairman CHABOT. Thank you very much. | |
| Ms. Chambers, you are recognized for 5 minutes. | |
| STATEMENT OF ANNE CHAMBERS | |
| Ms. CHAMBERS. Thank you. Good morning, Chair Chabot, and | |
| good morning to the Committee. My name is Anne Chambers. I am | |
| the CEO and owner of an ad agency in Cincinnati called Red212, | |
| as well as a startup called Jambaar. I am testifying today on | |
| behalf of Women Impacting Public Policy, a national nonpartisan | |
| organization that advocates on behalf of women entrepreneurs. | |
| I admit the title of this hearing is a little daunting, | |
| ``Making Washington Work for America's Small Businesses.'' But | |
| I think the tagline for my business, Red212, might be helpful | |
| to this conversation. | |
| ``At 211 degrees Fahrenheit, water is just hot. But by | |
| raising the temperature just 1 degree to 212 degrees, water | |
| boils and change occurs. Steam is created with a force so | |
| powerful that it can hurtle a locomotive across a continent and | |
| this 1 degree makes all the difference.'' | |
| I understand that this Committee has a history of | |
| bipartisanship and we are really thankful to the leadership of | |
| the Committee for its ability to get things done, mostly by | |
| raising cooperation and collaboration by 1 degree. WIPP | |
| publishes an annual blueprint that lays out policy principles | |
| and recommended congressional actions. | |
| The 2017 edition is hot off the presses, so I will | |
| concentrate my remarks on a few of the major issue areas that | |
| we know Congress is interested in pursuing. First and foremost | |
| is tax reform. For far too long, small businesses have | |
| struggled with the cost of compliance, and we have paid far | |
| higher taxes than large businesses. Higher rates. The House | |
| Blueprint on Tax Reform finally addresses the tax rate of pass- | |
| through entities by capping it at 25 percent. Further, it | |
| proposes to repeal the estate tax and the alternative minimum | |
| tax. This meaningful reduction in taxes would give us | |
| additional capital to grow our businesses and create jobs. Our | |
| economic blueprint calls for fair and equitable tax treatment | |
| for all businesses. | |
| Health reform is another issue constantly on our minds. The | |
| primary concern here is that any changes made to the current | |
| system take into account the impact on the small group market. | |
| Without the ability to pool, small businesses do not have the | |
| market clout to buy insurance. | |
| Equally important is access to pricing. We are disappointed | |
| that the current pooling mechanism, the instate-based | |
| exchanges, have underperformed. We are not wedded to the | |
| current system of exchanges. However, ensuring that a | |
| replacement plan contains an effective pooling mechanism will | |
| make Washington work for us. | |
| Access to capital continues to hinder business growth for | |
| women-owned businesses, as Maxine pointed out. With the | |
| emergence of technology-based lenders, crowd funding, and | |
| community development financial institutions, CDFIs, more | |
| options exist for women business owners than ever before. But | |
| women still lag behind their male counterparts with respect to | |
| access to capital. In fact, only 4 percent of all commercial | |
| loan dollars and 10 percent of all venture capital goes to | |
| women-owned firms. | |
| We recommend that Congress take the following steps. First, | |
| support SBA programs that provide women business owners with | |
| the business assistance they need to obtain capital, such as | |
| Women's Business Centers, SBDCs, and SCORE. | |
| Second, continue to support SBA loan programs. Again, as | |
| Maxine pointed out the importance of these, we encourage you to | |
| modernize the microloan program which has proven to be an | |
| important source of capital for women-owned businesses. | |
| As this Committee is well aware, WIPP fought for access to | |
| Federal contracts through the WOSB Procurement Program for 15 | |
| years. Although great strides have been made with respect to | |
| accessing Federal contracts, much more remains to be done. | |
| In 2016, WIPP published a report, ``Do Not Enter,'' which | |
| showed that women lack access to the government's largest | |
| contracts, Multiple Award Contracts, MACs. We are calling on | |
| Congress to require SBA to do a study of all MACs and determine | |
| to what extent women and other socioeconomic groups have tracks | |
| which allow them to compete for these large contracts. | |
| Last but certainly not least, compliance with regulations | |
| is part of doing business. We certainly appreciate the efforts | |
| by this Committee to increase the SBA's Office of Advocacy's | |
| clout as this will result in an amplification of our voice. | |
| President Reagan once said the most terrifying words in the | |
| English language are, ``I am from the government and I am here | |
| to help.'' WIPP believes that by working in a bipartisan | |
| fashion, Washington can truly be here to help. Women | |
| entrepreneurs all over this great Nation have the expectation | |
| that our elected officials are here to help. Whether it is | |
| access to Federal markets, access to capital, or lessening the | |
| tax burden, we stand ready to work with you on these important | |
| issues. | |
| This concludes my testimony. Thank you so much. | |
| Chairman CHABOT. Thank you very much, Ms. Chambers. And we | |
| would like to think that this Committee is here to help, but I | |
| do not know if I can speak for overall Washington. | |
| Mr. Paal, you are recognized for 5 minutes. | |
| STATEMENT OF RUTLAND ``SKIP'' PAAL | |
| Mr. PAAL. Mr. Chairman and distinguished members, thank you | |
| for inviting me to present testimony before the Committee. | |
| I am a fourth generation florist. In 1923, my great- | |
| grandfather opened a flower shop and greenhouses outside | |
| Baltimore. We now operate out of 12 locations in Maryland and | |
| New Jersey, including my great-grandfather's original location. | |
| Our employees are the heart of our business. They are the ones | |
| who comfort grieving families, share hugs with new | |
| grandparents, and see true love between couples preparing for | |
| marriage. | |
| We have always taken care of our employees. We were | |
| offering health care decades before ACA required us to do so. | |
| We established a company-sponsored retirement plan when we | |
| realized Social Security might not be enough for our retirees. | |
| We have a paid leave program that is extremely competitive for | |
| retail and nearly unheard of in the flower business. | |
| As a result, we have many valued employees who have made a | |
| lifelong career with us. It is important to note that our | |
| company attracts talent by offering competitive wages and | |
| benefits because we want to, not because we are forced to. | |
| Having the opportunity to set ourselves higher than required | |
| allows us to maintain a competitive employment environment. | |
| Since several years have elapsed since full implementation | |
| of the ACA, we have had an opportunity to see firsthand the | |
| devastating impacts that have occurred as a result of the | |
| legislation in our business. Since the enactment of the ACA, | |
| our monthly premiums have nearly doubled, yet our deductibles | |
| have more than tripled. In my opinion, it is not wise Federal | |
| policy to force us to pay significantly more for substantially | |
| less coverage. | |
| In addition to skyrocketing costs and reductions in | |
| benefits, the ACA has placed me at a competitive disadvantage | |
| because my competitors are not required to offer health care | |
| and are able to entice prospective employees with a higher | |
| salary. I ask Congress to fix the broken ACA system that is | |
| detrimental to me and countless other Main Street businesses. | |
| I applaud the recognition by Congress and the | |
| administration that the Tax Code, which seems to be so complex | |
| that not even my account can fully understand it, needs to be | |
| drastically simplified. | |
| Payroll taxes are simple, straightforward to calculate, and | |
| easy to plan for. We need something just as uncomplicated for | |
| corporate and pass-through taxes. | |
| While I highly commend efforts to reform our Tax Code, the | |
| Border Adjustment Proposal would be devastating to my business. | |
| Nearly 95 percent of the flowers I use in my retail flower | |
| shops are grown overseas. There is no domestic capacity to meet | |
| the demand. Flowers are not a necessity like food, clothing, or | |
| housing. If our products are taxed at a higher rate, those | |
| costs will translate to higher prices and consumers will shift | |
| their spending to other products where flowers have | |
| traditionally been appropriate. | |
| I ask that any border adjustment and tax reform exempt | |
| floral agricultural products to avoid significant harm to the | |
| more than 10,000 small flower shops across the country. | |
| There also needs to be certainty in legislation and | |
| regulation that allows small business owners to properly plan | |
| and prepare. The current environment creates economic chaos | |
| where we are unable to plan for payroll, benefits, or growth. | |
| Due to the current uncertainty, I am not comfortable continuing | |
| to expand my business. Constant political upheaval and shifting | |
| rules are counterproductive to business growth. | |
| In an era where only some criticize our government, I do | |
| want to take an opportunity to say thank you. I urge the | |
| Committee to celebrate prior bipartisan successes, such as | |
| repealing 1099 reporting requirements and reforming the estate | |
| tax, which have been issues with bipartisan support that have | |
| directly benefitted Main Street. However, there is much more | |
| work to do. I am hopeful that this Committee and this Congress | |
| will act to give a degree of certainty and clarity to business | |
| and to craft and pass legislation which will lead small | |
| business into a new era of prosperity. | |
| I am hopeful that my great-grandchildren will be able to | |
| take the reins of the family business 94 years from now just as | |
| I am today. | |
| Thank you again for giving me the opportunity to present | |
| this testimony before the Committee, and I look forward to | |
| answering any questions the members may have. | |
| Chairman CHABOT. Thank you very much. | |
| Mr. Borris, you are recognized for 5 minutes. | |
| STATEMENT OF DAVID BORRIS | |
| Mr. BORRIS. Thank you, Chairman Chabot, Congressman | |
| Schneider, and members of the Committee. Thank you for the | |
| invitation to testify today. | |
| My name is David Borris, and I serve on the Executive | |
| Committee of the Main Street Alliance, a national network of | |
| small business owners. I have been a small business owner for | |
| 32 years. My wife and I opened a homemade food store in 1985, | |
| and over the years have expanded it into a full-service | |
| catering company with 33 full-time employees and over 80 part- | |
| time and seasonal workers. We take great pride in what we do. | |
| Businesses need safety, transparency, and predictability in | |
| order to thrive. Today, I will focus on what Washington can do | |
| to ensure these basic vital conditions are met so small | |
| businesses like mine can succeed. | |
| This starts with ensuring that my employees, my family, and | |
| I can access quality, affordable health coverage. Hel's began | |
| offering health care in 1992, as we felt a moral obligation to | |
| do right by the people who are making our lives' work theirs as | |
| well. Employees contributed 50 percent in the first year and | |
| nothing thereafter. Beginning around 2002, though, we began to | |
| experience a series of annual, volatile premium increases. In | |
| 2004, 21 percent; in 2005, 10 percent; in 2006, 16 percent; in | |
| 2007, 17 percent; and in 2008, yet another double-digit | |
| increase forced us to ask long-term employees to reach into | |
| their pockets once again. | |
| Just as confounding as the premium swings themselves was | |
| the source of their unpredictability. For example, we had a | |
| dishwasher, great at his job for he suffered from a malady that | |
| required kidney dialysis. When I met with my insurance broker | |
| to discuss the steep rising premium for the upcoming year, he | |
| quietly acknowledged the spike was primarily due to the illness | |
| of that one single employee. | |
| The ACA has helped stabilize these costs as insurers can no | |
| longer underwrite based on health status and must adhere to | |
| medium medical loss ratios. This shields my business from sharp | |
| swings in premiums based on the health of one or two employees. | |
| I see these gains in my bottom line. | |
| My company has witnessed an unprecedented slowdown in rate | |
| increases. Since the passage of the ACA, our average annual | |
| increases are a fraction of what they were before, averaging | |
| 4.6 percent annually for the past 7 years. I am saving money on | |
| premiums and can plow those savings back into business | |
| investments and job creation. | |
| Beyond health care, the Federal Government has to ensure | |
| that we have sensible, protective regulations in place. As a | |
| small business owner who deals with regulations every day, I | |
| recognize the profound value of good regulation. Let me give an | |
| example close to home. | |
| I make my living preparing food. On a daily basis, I | |
| receive poultry, beef, and dairy products at my back door. I | |
| know that I can trust the safety of that food because of strong | |
| national industry regulations. And food service operations are | |
| some of the largest consumers of potable water in the country. | |
| We need powerful oversight of food and clean water regulations | |
| to stay in business. If Northbrook, Illinois, were to go | |
| through what Flint, Michigan, went through, I would be out of | |
| business the next day. | |
| Finally, what businesses like mine require more than | |
| anything from our Federal Government are evidence-based | |
| policies that keep overall consumer demand strong. The single- | |
| most important thing I need to be successful and to create more | |
| jobs is more customers, not tax breaks, not fewer regulations, | |
| customers; customers with enough disposable income to engage my | |
| services. The health of my business is tied to a healthy | |
| economy that has money circulating in a virtuous cycle of | |
| rising wages, consumer demand, and job creation. To do this we | |
| should raise the Federal minimum wage. | |
| Henry Ford understood the link between well-paid employees | |
| and paying customers more than a century ago when he recognized | |
| his business would only succeed if his workers earned enough | |
| money to buy the cars they were building and he doubled their | |
| wages overnight. In our local economies, the same link applies. | |
| My fairly paid employee is my neighbor businesses' paying | |
| customer. When people in my neighborhood cannot earn enough to | |
| keep up with the basics--things like buying goods, obtaining | |
| school supplies, and making car repairs--the entire local | |
| economy becomes unstable. That is bad for small business and | |
| bad for the economy as a whole. | |
| And finally, sensible immigration reform is critical for an | |
| inclusive healthy middle class. In the 10th Congressional | |
| District of Illinois alone, there are over 172,000 immigrant | |
| residents, including 5,700 entrepreneurs paying $1.7 billion in | |
| taxes and spending over $4.5 billion in our economy. Our | |
| current immigration and visa policies not only discourage | |
| international tourism and business travelers, but also hinder | |
| many businesses from finding the workers they need. We need to | |
| change that. | |
| In closing, I believe the role of Washington is to create | |
| the basic market conditions that allow small businesses like | |
| mine to thrive and compete on a level playing field with our | |
| larger competitors. We cannot continue to be the job creators | |
| and innovators that America needs us to be without these basic | |
| conditions. Affordable quality health care, sensible protective | |
| regulations, and policies that fuel a strong middle class, this | |
| is the recipe for small business success. | |
| Thank you again. I look forward to your questions. | |
| Chairman CHABOT. Thank you very much. | |
| We would now like to go into our questioning and, Ms. | |
| Turner, I will begin with you. I recognize myself for 5 | |
| minutes. | |
| It is said that a rising tide lifts all boats, and we have | |
| been seeing some good news lately in a number of areas. We have | |
| seen the stock market at record highs. We have seen | |
| unemployment numbers coming down, and productivity gains and | |
| other positive economic factors lately. What can we do here in | |
| Washington to ensure that those gains reach the small business | |
| segment of the American economy? | |
| Ms. TURNER. Can you hear me okay? I think it is the access | |
| to capital first and foremost. We have been waiting for such a | |
| long time in order to be able to expand our companies, to grow | |
| our businesses. I think the access to capital, especially since | |
| the economy is strong at this point, that would be the number | |
| one thing that we could use. | |
| Chairman CHABOT. And you mentioned that Dodd-Frank has been | |
| particularly detrimental to that effort to make sure that small | |
| businesses get more access to capital, is that right? | |
| Ms. TURNER. I do. I think that has to be reformed. | |
| Chairman CHABOT. Okay. Thank you very much. | |
| Ms. Chambers, I will move to you next. This week the House | |
| is debating H.R. 1101, the Small Business Health Fairness Act, | |
| which would allow small businesses to band together through | |
| associations to purchase quality health care for their workers | |
| and their families, hopefully at a lower cost. You mentioned | |
| that WIPP, Women Impacting Public Policy, supported such | |
| measures in the past. Could you explain how policies such as | |
| the one that we are considering this week could help small | |
| businesses lower their healthcare costs? | |
| Ms. CHAMBERS. WIPP has supported---- | |
| Chairman CHABOT. Can you turn the mic on? I am not sure if | |
| it is on. | |
| Ms. CHAMBERS. I am sorry. | |
| Chairman CHABOT. That is all right. | |
| Ms. CHAMBERS. WIPP has supported association health plans | |
| for a long time and the idea is that it gives us so much more | |
| negotiating power because as small businesses we simply cannot | |
| compete with the negotiating power that big businesses have. So | |
| if Congress can allow small businesses to join bigger pools, | |
| especially across State lines, it gives us even more buying | |
| power. | |
| Our objectives really are to have choice of plans and lower | |
| prices. That is our main goal. It is complicated. I think we | |
| talked about it earlier, Mr. Borris, and the devil I think is | |
| in the details, but this is important to us. | |
| Chairman CHABOT. Okay. Thank you very much. | |
| Mr. Paal, I will go to you next. Could you talk a little | |
| bit about the nexus of how Obamacare has not only driven up | |
| costs, especially in your instance. I think you said that your | |
| premiums have doubled and the deductibles have risen, so | |
| actually using that has tripled. So even if you have coverage, | |
| oftentimes you are paying so much out-of-pocket, by the time | |
| the insurance kicks in, you effectively, arguably do not really | |
| have health insurance, or at least very good health insurance. | |
| And it has also raised taxes, Obamacare has, on small business | |
| owners, and significantly increased regulatory costs. Arguably, | |
| it is kind of like a triple whammy. Would you address that? | |
| Mr. PAAL. Sure. Thank you for the question. | |
| As far as ACA is concerned, one of the biggest challenges | |
| that it hits us with is we are in this middle ground. We have | |
| more than 50 FTEs, so we are required to offer health care, but | |
| we do not have more than 50 full-time employees. And so as a | |
| result, we get put into large group insurance plans when we | |
| really only have 15 to 20 employees who actually participate | |
| with them. So the ratings and the underwriting that is involved | |
| on our end ends up driving those premiums way up. | |
| In addition, we happen to own a number of individual, | |
| standalone, retail flower shops. Most other retail flower shops | |
| do not hit that threshold of having to provide coverage, so | |
| most of my competitors are able to offer a little bit more in | |
| terms of a salary to their employees or prospective employees | |
| whereas those employees can then go on the exchange and get a | |
| lesser expensive plan or a subsidy. We are not able to do that | |
| because we have to offer them the coverage, and if they do not | |
| take it from us, they do not get the subsidy. So it is a | |
| vicious cycle that definitely needs some work. | |
| Chairman CHABOT. Thank you. | |
| And I do not have a whole lot of time, but I want to go to | |
| you, Mr. Borris, if I can. In your testimony you did not | |
| mention any regulations that negatively impact your business. | |
| Are there any Federal regulations that you do not like? | |
| Mr. BORRIS. Yeah, so we are a small business. Right? I can | |
| honestly tell you that I cannot think of a time that I sit at | |
| my desk and I am tearing my hair out over why do I need to | |
| comply with this and why do I need to comply with that? Now, it | |
| just has not really hit me in that way. | |
| Chairman CHABOT. Okay. Fair enough. The answer basically is | |
| there are not any that come to mind that you do not like coming | |
| out of Washington? | |
| Mr. BORRIS. Correct. | |
| Chairman CHABOT. Okay. Thank you very much. | |
| The ranking member is recognized for 5 minutes. | |
| Mr. SCHNEIDER. Thank you. And again, thank you to the | |
| witnesses for sharing your experience, your insight. It is so | |
| important for us to hear what you are dealing with so we can | |
| understand. Ms. Chambers, as you said, we really can and hope | |
| to be of some assistance to clear away the obstacles to help | |
| small businesses succeed. | |
| As I think, and I come from a small business background, | |
| having my own business working with other clients in my | |
| consulting practice, but in my mind there are four big things | |
| that the businesses really need to succeed. The first we cannot | |
| help you with. It is the concept. Each of you have your own | |
| business concept. People come up with their ideas. Some are | |
| good, some are bad, some will succeed. That is what the market | |
| should determine. But the other areas I think we can help. | |
| The second thing I think we need, and you have touched on | |
| it, is talent. Access to talent. Good people who have the | |
| skills to come to your businesses, learn your specific | |
| business, and that I think falls on us to make sure that we are | |
| investing in education, that we are providing young people the | |
| skills and lessons they need to go into business to do any | |
| variety of things and training the next generation of | |
| entrepreneurs. | |
| Ms. Turner, as you touched, and I agree with you, the need | |
| to have access to capital, we all have our ideas. Without the | |
| capital behind them, whether that is going to get a loan from a | |
| bank, to be able to reach out to angel investors--and I will | |
| complement the chairman on his effort of passing in the House | |
| anyway, the Halos Act, and we need to see that pass in the | |
| Senate. But capital is crucial. | |
| It is the fourth thing that I think is most important in | |
| general for the economy, and that is a stable business | |
| environment. That comes from sensible regulation that lays out | |
| the lines. In my mind I use my analogy all the time of a | |
| bowling alley. Regulations should be the bumpers and the gutter | |
| to keep the balls from going in the gutter. If they start to | |
| encroach on the alley and make it more difficult to knock down | |
| the pins, they have gone too far. If they start exposing the | |
| gutter to risks, they have gone too far the other way. | |
| But it is also on taxes, as you touched on, Mr. Paal. It is | |
| on confidence, knowing what is coming out of this institution | |
| so small businesses in particular can make the plans. I think | |
| the reason we have seen small businesses not leading the last | |
| recovery is because small business owners can make the decision | |
| to wait another month, another year to do that. So I think that | |
| is key. | |
| As I focus on the uncertainty, Mr. Borris, I am going to | |
| turn to you and part of your last remarks because you talked | |
| about immigration reform, the need for immigration reform. | |
| Well, the CBO has said if we pass comprehensive immigration | |
| reform it would add $2 trillion to our economy. What impact has | |
| the uncertainty and perhaps the recent executive orders had on | |
| your business? | |
| Mr. BORRIS. Yeah. So my entire kitchen staff, right, are | |
| all immigrant workers, and half my operation staff, 70 percent, | |
| 80 percent of my hourly laborers are from immigrant families. | |
| And it is this climate of fear that is living in there now. | |
| Even though, you know, we have I9s, all my guys are legal, but | |
| I do not know what the story is with their extended families-- | |
| parents, brothers, uncles, sisters--and it is an | |
| extraordinarily uncomfortable thing for them. And to look at | |
| them and juxtapose to my Caucasian, you know, five-generation | |
| citizens of the United States, to impose that on them is | |
| extraordinarily uncomfortable. | |
| And what we do not know is that if this thing starts to | |
| turn into tremendous mass deportations, what happens when an | |
| uncle gets deported and now my guy says, well, I cannot really | |
| stay here now because I have got to go back home and help him | |
| out even though I can stay here and be here. I think we all | |
| know the comprehensive immigration reform is critical to | |
| getting people out of the shadows, getting people to a point | |
| where they can earn more money so that they can feel empowered | |
| that they can negotiate and not feel like they have to be | |
| afraid with their bosses, feel empowered to work in safe | |
| working conditions. I mean, it is a train wreck and the way to | |
| address it is not to---- | |
| Mr. SCHNEIDER. I do not mean to cut you off, but I want to | |
| turn to the others. If it were possible that across the aisle | |
| we could come together and come up with a policy to secure our | |
| borders, to have certainty around immigration law, would it | |
| have an impact on your business? Mr. Paal? | |
| Mr. PAAL. Most certainly it would. There is a huge segment | |
| in the floral growing industry, especially on the West Coast, | |
| that depends heavily on immigrant labor, and they are | |
| struggling right now with finding good people and it is an | |
| issue for us on an ongoing basis. Not me directly, but it is | |
| the trickledown to me. If they are able to get the flowers | |
| grown then, then it lessens some of the impact on some of the | |
| other issues. | |
| Mr. SCHNEIDER. Ms. Chambers, Ms. Turner? | |
| Ms. CHAMBERS. For me, not as directly for Red212, but for | |
| Jambaar, the startup that I am doing, in terms of technology | |
| expertise and the growth that we are going to need with | |
| employees, yes, I do think it will. | |
| Mr. SCHNEIDER. And Mrs. Turner--Ms. Turner? | |
| Ms. TURNER. Absolutely. We have about 15 immigrant | |
| employees, and there is that feeling of uncertainty for them. | |
| Even though they have been through E-Verify and we know that | |
| they are here, it is the extended families that we worry about | |
| and the impact that that could have on our company. And they | |
| are family. Some of them have been with me for 20, 25 years. It | |
| is a difficult situation and we empathize that they worry about | |
| this every single day. | |
| Mr. SCHNEIDER. Well, thank you. My time is expired and I | |
| yield back. | |
| Chairman CHABOT. Thank you. The gentleman's time is | |
| expired. | |
| The gentleman from Nebraska, Mr. Bacon, is recognized for 5 | |
| minutes. | |
| Mr. BACON. Thank you. We appreciate our distinguished panel | |
| for being here today and I associate my comments, too, with Mr. | |
| Schneider there. I think we do need to find a bipartisan way | |
| forward on securing the border, but plus, find a better way to | |
| meet business concerns with immigration. We have got to | |
| modernize that and find a compassionate way ahead for those who | |
| are here. So I think we can do that working together. | |
| My first question is for Mrs. Turner. We had a previous | |
| testimony here that said that regulations were the top concern | |
| for small businesses, but it has recently been superseded by | |
| health care and the ACA and the impacts of the costs. I think | |
| also going around my district I hear about health care, | |
| regulations, taxes, access to capital, and also having a hard | |
| time finding a workforce to fill spots. What would be the top | |
| one or two things that we should be focusing on out of that | |
| list? | |
| Ms. TURNER. You know, I think so much of this is | |
| regionalized, because what is affecting middle America is | |
| different for other regions. Every single one of these is | |
| important. Every single one of these has to be addressed. If I | |
| were looking at my own company in my narrow part of the world, | |
| it would be regulatory. | |
| Mr. BACON. Okay. | |
| Ms. TURNER. Has a tremendous affect. But having spoken with | |
| small businesses throughout the company, there is not one thing | |
| that I would say comes to the top of the list every single | |
| time. It is a gamut. | |
| Mr. BACON. So we have got a lot of work to do. That is what | |
| I am hearing. | |
| Ms. TURNER. You certainly do. | |
| Mr. BACON. Okay. | |
| Ms. Chambers, could you expand a little bit on why it is so | |
| important for Congress to nullify the blacklisting rule by | |
| passing H.R. 37? | |
| Ms. CHAMBERS. I do not know what the blacklisting rule is. | |
| Mr. BACON. Okay. Okay, well, we come back to that then. | |
| Are there others? | |
| Ms. CHAMBERS. Okay. I understand blacklisting contractors. | |
| WIPP is happy for the repeal that was done. | |
| Mr. BACON. Okay. | |
| Ms. CHAMBERS. Blacklisting contractors. | |
| Mr. BACON. Are there any other regulations we should go | |
| after with the Congressional Review Act? Or any other | |
| regulations we need to pull out? | |
| Ms. CHAMBERS. No. I mean, my focus is on access to capital | |
| and representing Women Impacting Public Policy. | |
| Mr. BACON. Okay. | |
| Ms. CHAMBERS. So our issues are really around parody and-- | |
| -- | |
| Mr. BACON. The access to capital focus area. Okay. | |
| Ms. CHAMBERS. As well as tax reform for small businesses. | |
| Mr. BACON. And one last question to Mr. Paal. Your | |
| testimony about the premiums are compelling: double the | |
| premiums, triple the deductibles. Hard to afford that. | |
| Mr. PAAL. It is. And where we really see it, you know, it | |
| hits home. We had my first son 5 years ago, or 5-1/2 years ago, | |
| and I remember our deductibles then. And we are pregnant with | |
| our third now and our deductibles are much different and our | |
| copays are much different this time around. And so you see it | |
| firsthand in the course of just a couple of years. | |
| Mr. BACON. I just encountered a recent mom who had a | |
| $12,000 deductible. Her health care paid not a single penny for | |
| the delivery of her child, so it did not work for her. | |
| Could you expand a little bit about the impact of the | |
| overtime rule and how that has impacted your business? We are | |
| going to open it up to all four of you. | |
| Mr. PAAL. Absolutely. It has impacted us tremendously. We | |
| have a number of, especially our management team, they are all | |
| salaried employees. And being a somewhat seasonal business, | |
| Valentine's week, everybody is working. Everybody is working | |
| every day and we are working long hours. And one of the | |
| privileges that our staff that were salary-based had enjoyed | |
| was being able to take some extra time off the next week or the | |
| next month and still get their full pay. So their cash flow at | |
| their level was consistent. We had to redesign our whole | |
| compensation package when those regulations came out, so we | |
| still have, you know, when I talk about uncertainty, that is it | |
| in a nutshell right there. We do not know where it is going to | |
| land. | |
| Mr. BACON. Right. Mr. Borris, has the overtime rule | |
| impacted you? | |
| Mr. BORRIS. Yeah. So what we did with the overtime rule is | |
| we had to be a little bit thoughtful about how we were | |
| structuring salaries in the $35,000 to $40,000 range, because I | |
| do have people who earn in the $35,000 to $40,000 range. And | |
| our understanding of the overtime rule is that you can create a | |
| salary based on a workweek larger than 40 hours. Right? As long | |
| as you are not falling underneath minimum wage requirements. | |
| Right? For us, we actually have higher minimum wage | |
| requirements personally in my company than we do in the State | |
| of Illinois, or sadly at the Federal level. I mean, we have an | |
| $11 minimum wage as a company minimum wage. So I think that | |
| some of the conversation on the overtime rule can continue to | |
| be expanded. I think the intent of it is critical, though, that | |
| we look at when we are talking about either hourly wages or | |
| salaried wages that what we are looking at is how do we | |
| continue to put upward pressure on wages so that we put upward | |
| pressure and more money circulating in the economy? So while I | |
| am not necessarily averse to having a deeper discussion on how | |
| we nuanced the overtime rule, I think the idea behind it is | |
| important. And when we look at what has happened with salaried | |
| employees over a 30-year period and we look at the lack of | |
| purchasing power and then we look at organizations who deeply | |
| take advantage of people. Right? A kid working at a gas station | |
| is supposed to be 70 hours a week and because we give him a key | |
| and tell him he can lock the door, so he satisfies the duties | |
| test and he is getting paid $22,000 to work 70 hours a week, | |
| that does not help my local economy. | |
| Mr. BACON. Well, my time is expired. I want to thank you | |
| all for your testimony, and I yield back. | |
| Chairman CHABOT. Thank you. The gentleman yields back. And | |
| I might note my first job was pumping gas in an Ohio station, | |
| in Cincinnati, Ohio, and I made $1.25 an hour. I thought I was | |
| making big money, so. | |
| Mr. BORRIS. At least you got the $1.25 for every hour you | |
| worked. | |
| Chairman CHABOT. That is right. And the job, there are not | |
| many people who pump gas anymore, other than they used to do it | |
| at the Exxon station on Capitol Hill on Pennsylvania Avenue | |
| where it is like $2.10 elsewhere and it is like $5 up there, | |
| but it is one of the only stations around so you pay it. Sorry, | |
| I digressed there a bit. | |
| The gentleman from Pennsylvania, Mr. Evans, who is the | |
| ranking member of the Subcommittee on Economic Growth, Tax, and | |
| Capital Access, is recognized for 5 minutes. | |
| Mr. EVANS. Thank you, Mr. Chairman. | |
| Mr. Borris, I would like to--the title of this hearing is | |
| ``Making Washington Work for American Small Business'' is the | |
| title. Then when I go to your testimony, on page 4 you say, | |
| ``Small business owners need policies that keep consumer demand | |
| strong.'' So what I am trying to figure out is, are we talking | |
| past each other? | |
| Because I am listening carefully to what you said. You said | |
| not tax breaks, not fewer regulations, not less oversight, but | |
| more customers. So what I am interested in is you said making | |
| Washington work for small business, and I need you to tell us, | |
| it does not sound like we are either listening to you on the | |
| frontline, and I am just curious if anybody else has that same | |
| view because I thought you were very direct in what you said, | |
| the name of the game is customer, not that your taxes need to | |
| be in--not that everything is overregulated. I am just trying | |
| to reconcile what is being said at the hearing and what you | |
| were saying. | |
| So are we missing something? Tell me. | |
| Mr. BORRIS. Yeah, that is a nice broad-based question. | |
| Mr. EVANS. Yes, I need this. | |
| Mr. BORRIS. I think that there is a few areas, right? | |
| Mr. EVANS. Go ahead. | |
| Mr. BORRIS. One I touched on is wage growth. | |
| Mr. EVANS. Right. | |
| Mr. BORRIS. For Washington to get behind seeing solid wage | |
| growth and to create conditions that push for that I think is | |
| really important. I think on tax policy it is really important. | |
| I think every small business owner at the table would agree | |
| with me that as a small business, none of us have--do any of | |
| you guys have five or six tax accountants working for you and | |
| trying to pick out the loopholes, right? So I think that when | |
| we look at companies that do not pay their fair share, right, | |
| when we have, you know, if it is 288 profitable Fortune 500 | |
| companies, 26 paid no Federal income tax last year. So where | |
| does that money sit? So it sits in their coffers. They are not | |
| putting it back into the economy. | |
| We have trillions of dollars expatriated offshore. If we | |
| could figure out a way to get that back in a fair way and not | |
| in such a low rate that they are incentivized to do it again | |
| and again and again and put that money to work in this economy, | |
| that is going to exponentially help the free flow of capital | |
| through the economy. For me, it is really about aggregate | |
| demand, right? | |
| So when you guys are looking at policies, I would say that | |
| the test for that is, is this going to stimulate additional | |
| demand in the economy or is this just going to provide a whole | |
| boatload of dough that is going to get scraped off the top into | |
| the pockets of people who do not really need it and not going | |
| to be flowing through the economy? Without being a policy | |
| expert, you guys are policy experts, I am just a small business | |
| owner, but those would be the things that I think would be | |
| helpful. | |
| Mr. EVANS. I think you are a better policy expert than | |
| anybody because you are on the front line. I mean, you are. So | |
| that is why I wanted to kind of reconcile the hearing title and | |
| you. | |
| Mr. Paal, your reaction to the aspect of the recognization | |
| of the title and are we talking past each other? | |
| Mr. PAAL. No. I think there has been an atmosphere, as far | |
| as I have seen, of Washington working for Washington back and | |
| forth in this and the typical politics that you hear about on | |
| the news shows and whatnot. I think just physically having this | |
| hearing makes it very clear consideration that this Committee | |
| and this Congress is interested in what small business is | |
| involved in. | |
| I have had a lot of visits from local representatives back | |
| in district at a bunch of our different retail locations, and | |
| it is nice. They walk in, what can we do to help you? And they | |
| are hearing at that point not just from me as a business owner, | |
| but also my employees, our delivery drivers, our flower | |
| designers, and our sales clerks that are working part-time. So | |
| I applaud having the meeting for sure. | |
| Mr. EVANS. Ms. Chambers? | |
| Ms. CHAMBERS. I would echo what Mr. Paal said, that I think | |
| the very fact that we are having this hearing speaks volumes | |
| and that I think it really says that you are listening and that | |
| we are having this back-and-forth, and I think the | |
| collaboration is what is key. I think the bipartisanship is | |
| fantastic, but I think that the collaboration and this | |
| conversation is really important for our businesses. | |
| Mr. EVANS. Ms. Turner? | |
| Ms. TURNER. I think you are definitely hearing us. I think | |
| that, as Mr. Bacon outlined, you have down the main points of | |
| what it is that is concerning businesses. And so I do, and it | |
| is a pleasure to be able to come forward and to speak with you | |
| today because this is the kind of dialogue that is needed. It | |
| is now your responsibility to then take what our concerns are | |
| and to put these into policies that are then making a | |
| difference for each and every one of our small businesses. | |
| Mr. EVANS. Thank you, Mr. Chairman. | |
| Chairman CHABOT. Thank you very much. The gentleman's time | |
| is expired. | |
| The gentlelady from North Carolina, Ms. Adams, is | |
| recognized for 5 minutes, and she is the ranking member of the | |
| Subcommittee on Investigations, Oversight, and Regulations. | |
| Ms. ADAMS. Thank you, Mr. Chair and Ranking Member, and | |
| thank you to all the witnesses for your testimony. | |
| Ms. Chambers, to start, can you speak about what Congress | |
| can do to proactively help small firms adapt to the current | |
| levels of lending, which are better today, but still not as | |
| great as previous session lending numbers? | |
| Ms. CHAMBERS. Could you repeat that question for me? | |
| Ms. ADAMS. Can you speak about what Congress can do to | |
| proactively help small firms adapt to the current levels of | |
| lending, which are better today, but still not as great as | |
| previous session lending numbers? | |
| Ms. CHAMBERS. In terms of the area that I focus on with | |
| women-owned businesses because the numbers are so small, I | |
| think as I said in my presentation or in my testimony, | |
| supporting the various programs, particularly the SBA, | |
| modernizing the micro-lending programs would be very beneficial | |
| for women-owned businesses and businesses in general. But until | |
| women have access to capital for their businesses, I think this | |
| is an issue that will not go away. | |
| Ms. ADAMS. Yes, ma'am. Would anyone else like to respond? | |
| Mr. BORRIS. Yeah, I will jump in. | |
| Ms. ADAMS. Yes, sir. Go ahead. | |
| Mr. BORRIS. Yeah, so I think that either between the SBA | |
| and between looking back at the Community Reinvestment Act, | |
| right, so that we get more robust enforcement of what was | |
| originally intended, right? That what we want to do, and I | |
| think these guys would agree with me, also, we want to open up | |
| this flow of capital not just for businesses with 500 employees | |
| and 400 employees, but for businesses with 10 and 20 and 30 and | |
| 50 employees, right? Businesses who are trying to grow from a | |
| $2 million business to a 4- or $5 million business, and not | |
| just talking about $50 million and $100 million businesses. | |
| They might well become $50 million businesses in the future if | |
| we can help them get over the next leg. | |
| So that would be my thinking on it. Not so much money going | |
| into the big banks for the big loans, but pushing money into | |
| community banks for smaller loans and being able to help small | |
| business that way. | |
| Ms. ADAMS. Thank you. To any member of the panel---- | |
| Ms. TURNER. Ms. Adams? | |
| Ms. ADAMS. Yes? Oh, yes, ma'am. Go ahead. | |
| Ms. TURNER. I think the repeal of Dodd-Frank would be a | |
| very good way to begin, so that the community banks would be | |
| able to lend to small businesses again. | |
| Ms. ADAMS. Okay. Thank you for your comments. | |
| With regard to tax reform, what policies are necessary to | |
| include in a reform package, and which policies would you | |
| consider a nonstarter with regard to its impact on small | |
| businesses? Anyone who would like to respond can do so. | |
| Mr. PAAL. Well, I could tell you and I spoke about it in my | |
| opening statement. The Border Adjustment Tax would be a real | |
| deal killer in the flower business. You know, most of our | |
| flowers come out of either South America or Holland or Canada. | |
| There is some growing happening in Mexico now. There is just | |
| not production ability in the U.S. That is all we sell. It is | |
| not like you say, okay, well, you know, the price of avocados | |
| is going to go up at the grocery store. That is all we sell in | |
| our business is flowers. So if that passes through, we cannot | |
| absorb a 20 percent price increase, and we cannot pass it on to | |
| our consumer because our customers will simply--they will just | |
| not buy flowers. They will buy a fruit basket or candy or | |
| something that is grown domestically. So that hits real big for | |
| us. And whether there is an exemption for floral agriculture or | |
| maybe an exemption for small business to a certain threshold | |
| that would assist other industries as well. | |
| Ms. ADAMS. Okay. Does anyone else want to comment with a | |
| few seconds left? | |
| Ms. CHAMBERS. Yes. I just want to add on that reforming the | |
| Tax Code to make deductions and credits equitable no matter | |
| what the structure of the business, especially around pass- | |
| throughs, permanently repealing the estate tax and allowing | |
| small businesses to pass from one generation to another as you | |
| talked about, and then simplifying the Tax Code for small | |
| businesses, as Mr. Borris said, I just want to support that as | |
| well. | |
| Ms. ADAMS. Great. Thank you very much. Mr. Chair, I yield | |
| back. | |
| Chairman CHABOT. Thank you. The gentlelady yields back. | |
| The gentleman from Florida, Mr. Lawson, who is the ranking | |
| member of the Subcommittee on Health and Technology, is | |
| recognized for 5 minutes. | |
| Mr. LAWSON. Thank you, Mr. Chairman. | |
| My question will center around access to capital, and the | |
| question would be since more credit unions and commercial | |
| lenders have been getting involved in making loans to minority | |
| and women-owned business, has that been very beneficial, | |
| especially for women-owned businesses in the marketplace to | |
| have greater access to capital? Ms. Chambers, you might want to | |
| respond to that. | |
| Ms. CHAMBERS. Well, certainly there has been improvement, | |
| but we have such a long way to go. Women are still receiving | |
| only 16 percent of all small business loans, so without making | |
| much greater strides we are going to be behind our male | |
| counterparts for a long, long time. So we are going to need to | |
| continue with this push and think of different programs. The | |
| idea that in government contracting we have finally reached our | |
| 5 percent quota last year, but it took 16 years to get there. | |
| So I think that there is a lot of work that needs to be done. | |
| Mr. LAWSON. Okay. And if I may, and someone else can answer | |
| it, and this is where they say that they would like to keep the | |
| government out of the small business situation, should there be | |
| legislation that requires a financial institution to provide | |
| resources for minority and women-owned business at a certain | |
| level? | |
| Mr. BORRIS. Is that an open question? | |
| Mr. LAWSON. Yeah. | |
| Mr. BORRIS. So yes, I think. The CDFI funding that was | |
| zeroed out in the Trump budget should certainly be restored. | |
| That is where I would begin, and I would also say that if we | |
| are looking for where that money comes from into our Federal | |
| coffers, I know there is going to be a big argument about what | |
| the rate of repatriation is, but I think we can take one step | |
| back in that conversation and talk about how we start ending | |
| deferral to begin with so we do not have to deal with this | |
| again with trillions of dollars in the future. | |
| Mr. LAWSON. I have another question that you might have | |
| responded to earlier. It appears that everyone speaks about | |
| rebuilding America, you know, and I think about it as | |
| rebuilding ports, railroads, bridges, and highways. | |
| Infrastructure improvement is critical to America. Everyone | |
| talks about it in every political campaign and so forth. Can | |
| you detail the regional impact of spending, and is that | |
| critical to small business growth? | |
| Mr. BORRIS. Sure. I think that for any one of us to look at | |
| what happened when Dwight Eisenhower made the decision, right, | |
| to build the interstate highway system, for any of us to | |
| believe that the business growth that we saw in the 1960s in | |
| this country, to pretend that had nothing to do with taxpayer | |
| investment and being able to move goods and services from | |
| Cincinnati to New York in half the time that they used to move, | |
| that matters tremendously. And I think the critical question on | |
| infrastructure investment, though, is when we start granting | |
| these contracts and we start investing taxpayer dollars, are we | |
| going to allow companies to pay $6 an hour so that the company | |
| that has the contract gets to keep all the profit which they | |
| suck out of the community and take it to their multinational | |
| headquarters? Or are we going to demand union wages, prevailing | |
| wage? Are we going to make certain that that money gets spent | |
| and stays in the pockets of the local communities where the | |
| infrastructure development is being done? I think that is the | |
| critical question. | |
| Mr. LAWSON. Okay. And I will try to be brief on this | |
| question. When I was in Florida in the Senate, I repealed the | |
| intangible tax on businesses that are earning less than at that | |
| time $25,000, you know, because it took probably more money to | |
| pay the accountant to do the forms than the tax that it was | |
| paying to the government. Should there be more consideration | |
| done about repealing some of the other burdens that they have | |
| on small businesses? Ms. Turner? I only have about 15---- | |
| Ms. TURNER. Absolutely. I totally agree with you that | |
| changing that outlook will make small businesses flourish and | |
| quicker. As I stated before, we have been waiting for this to | |
| take shape and I think it is very important that we move | |
| forward as quickly as possible. Once we start putting money | |
| back into the small business community, we are going to see a | |
| tremendous growth. And if we can hit that 1 percent, that 2 to | |
| 3 percent movement, then we are going to see extraordinary | |
| things happen. | |
| Chairman CHABOT. Thank you. The gentleman's time has | |
| expired. Go ahead. | |
| Mr. BORRIS. Okay. I would just say I agree. The incubator | |
| conversation is an important conversation. Right? This is a | |
| scalpel conversation versus a hatchet. And when we are looking | |
| at regulations, yes, allowing it to soften on the smallest of | |
| small businesses so we can incubate them and give them a chance | |
| to grow makes sense. But to take that and then run that up to | |
| business that are doing hundreds of millions of dollars and | |
| letting them be the beneficiaries of those carve-outs because | |
| we are going to try a one-size-fits-all does not work. | |
| Chairman CHABOT. Thank you. The gentleman's time is | |
| expired. | |
| Just a brief comment from the chair before we adjourn the | |
| hearing here today. The gentleman mentioned infrastructure and, | |
| Mr. Borris, you mentioned the interstate highway system. I | |
| happened to be at a speech last night and the keynote speaker | |
| was somebody who probably half the people in this room thinks | |
| is great and the other half loathe. And he gave an interesting | |
| speech, and a couple of things he mentioned. One thing he | |
| mentioned was Abraham Lincoln approving the intercontinental | |
| railroad and he mentioned Eisenhower approving the interstate | |
| highway system as you just mentioned that. And then he was | |
| talking about the infrastructure bill and the importance of | |
| that. I do not know if he was talking about putting himself in | |
| the same category as those other two presidents, probably in | |
| his mind yes, but it was interesting to hear your question, | |
| your response, and think of what I just heard last night. | |
| But in any event, I think this hearing has been very | |
| helpful, and there is a whole lot of things going on. Tomorrow | |
| we are supposed to have a key vote on one of the issues that we | |
| touched on: health care. Whether that vote will happen or not | |
| remains to be seen. It depends on whether the votes are there, | |
| I think, or not, and maybe that is the reason some members are | |
| not here; they are being worked on. But there is a lot of key | |
| issues, like that one tomorrow on health care. | |
| Regulations, you know, are a key issue that affect small | |
| business folks. Tax reform that we touched upon, access to | |
| capital and Dodd-Frank, a whole range of things are very | |
| important issues, and I think this panel was very, very helpful | |
| in letting our members and the members that we will communicate | |
| with that did not have the ability to be here today to let them | |
| know what the small business community thinks about these | |
| issues and what kind of changes that we ought to be making. Not | |
| just because it is relevant the small business community, but | |
| they are paramount as far as this Committee is concerned. | |
| So I want to thank you for shedding light on each of these | |
| topics. You all did a great job, I think. Whether you were | |
| called by the majority or the minority really, I think you are | |
| all very, very good. So thank you very much for that. | |
| I would ask that all members have 5 legislative days to | |
| submit statements and supporting materials for the record. And | |
| if there is no further business to come before the Committee, | |
| we are adjourned. Thank you very much. | |
| [Whereupon, at 12:09 p.m., the Committee was adjourned.] | |
| A P P E N D I X | |
| [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] | |
| The U.S. Chamber of Commerce is the world's largest | |
| business federation representing the interests of more than 3 | |
| million businesses of all sizes, sectors, and regions, as well | |
| as state and local chambers and industry associations. The | |
| Chamber is dedicated to promoting, protecting, and defending | |
| America's free enterprise system. | |
| More than 96 percent of Chamber member companies have fewer | |
| than 100 employees, and many of the nation's largest companies | |
| are also active members. We are therefore cognizant not only of | |
| the challenges facing smaller businesses, but also those facing | |
| the business community at large. | |
| Besides representing a cross-section of the American | |
| business community with respect to the number of employees, | |
| major classifications of American business--e.g., | |
| manufacturing, retailing, services, construction, wholesalers, | |
| and finance--are represented. The Chamber has membership in all | |
| 50 states. | |
| The Chamber's international reach is substantial as well. | |
| We believe that global interdependence provides opportunities, | |
| not threats. In addition to the American Chambers of Commerce | |
| abroad, an increasing number of our members engage in the | |
| export and import of both goods and services and have ongoing | |
| investment activities. The Chamber favors strengthened | |
| international competitiveness and opposes artificial U.S. and | |
| foreign barriers to international business. | |
| Thank you Chairman Chabot, Ranking Member Velazquez, and | |
| Members of the Committee for the opportunity to speak with you | |
| today. My name is Maxine Turner and I am the Founder of Cuisine | |
| Unlimited Catering & Special Events in Salt Lake City, Utah. I | |
| am here representing the U.S. Chamber of Commerce of which I am | |
| a Board Member and chairperson of the Small Business Council. I | |
| am honored to speak before you today regarding the critical | |
| issues that affect or small business members. | |
| The Chamber is the world's largest business federation. It | |
| represents the interests of over 3 million businesses of all | |
| sizes, sectors, and regions, as well as state and local | |
| chambers and industry associations. The majority of Chamber | |
| members are small firms. In fact, 96 percent of Chamber member | |
| companies have fewer than 100 employees and 75 percent have | |
| fewer than 10. Our Small Business Council works to ensure the | |
| views of small business are considered as part of the Chamber's | |
| policy-making process. | |
| My company, Cuisine Unlimited, was established more than 37 | |
| years ago offering off-premise catering. Today, we are a | |
| second-generation family owned business with 120 full and part- | |
| time employees offering full catering and events services in | |
| our local community, nationally and internationally. We have | |
| catered events throughout the country and have been involved | |
| with seven Olympic games. We were the exclusive caterer at USA | |
| House for the United States Olympic Committee in Athens and | |
| Torino. | |
| As chair of the Small Business Council, I have met with | |
| hundreds of small business owners to better understand the U.S. | |
| small business landscape. Over the past decade, there have been | |
| many obstacles to overcome, including the worst recession since | |
| the Great Depression and a multitude of federal mandates coming | |
| from Washington, DC that have challenged our very existence. We | |
| want to grow our companies and contribute to the success of our | |
| communities. We find, however, roadblocks to that opportunity. | |
| We want to work with you to change that course so that our | |
| businesses have the resources to expand, create new jobs, and | |
| have a positive impact on our economy. | |
| Sometimes it is overlooked that small businesses comprise | |
| 99 percent of all U.S. employer firms and provide almost half | |
| the private-sector jobs.\1\ An individual employer may seem | |
| small, but the collective economic power of small business is | |
| very large. Roughly 50 percent of small businesses are women- | |
| owned and the small business sector is a job-creation machine, | |
| accounting for 2/3 of the net new jobs over the past two | |
| decades.\2\ These facts reinforce the importance of policies | |
| that encourage and help sustain our businesses so we may invest | |
| in our future and that of our country. | |
| --------------------------------------------------------------------------- | |
| \1\ Office of Advocacy, U.S. Small Business Administration, | |
| Frequently Asked Questions (June 2016), available at: https:// | |
| www.sba.gov/sites/default/files/advocacy/SB-FAQ- | |
| 2016<INF>--</INF>WEB.pdf. | |
| \2\ Id. | |
| As chair of our Small Business Council, I have the | |
| opportunity to hear from our members on a regular basis. Their | |
| stories are compelling and one cannot help but empathize with | |
| --------------------------------------------------------------------------- | |
| the difficulties faced by these business owners. | |
| Access to Capital | |
| The challenge of obtaining capital has been a consistent | |
| theme for small businesses. It is, however, the very | |
| fundamental component that drives innovation and business | |
| growth. Small businesses do not have large cash flows, cash | |
| reserves, or emergency funding. Therefore, access to capital | |
| plays a paramount role in economic growth and job creation. | |
| While passage of the Dodd-Frank law may have calmed fears | |
| of another financial meltdown, an unintended consequence of the | |
| law has been limiting small businesses' access to capital. | |
| Natalie Kaddas is an example of the unintended consequences | |
| of Dodd-Frank. Kaddas Enterprises is an active member of the | |
| Salt Lake Chamber of Commerce and I met Natalie through our | |
| mutual leadership in Salt Lake City. Kaddas is a 50-year old | |
| plastic molding manufacturing firm and a few years ago they | |
| secured an international contract for their | |
| BirdguarD<SUP>TM</SUP> product. Natalie thought this incredible | |
| opportunity was the time to take an entrepreneurial leap | |
| forward and build a new facility. They immediately filled out | |
| bank applications, and worked with a realtor and contractor to | |
| begin the process. Hopes were dashed when three banks with | |
| Small Business Administration (SBA) guarantees turned them | |
| down. Land was pledged, collateral offered, but like so many | |
| others, Kaddas didn't make it high enough up the point system | |
| for any bank to consider the loan. | |
| Personally, my company faced the exact same problem. We | |
| were awarded the exclusive contract for all food and beverage | |
| services at our new performing art center that opened in | |
| November 2016. It required that we make the investment to equip | |
| three on-site kitchens and all the necessary small wares. This | |
| annual multi-million dollar contract gave us the opportunity to | |
| expand. We would increase from a staff of 50 to well over a | |
| hundred within a few months. We met with three banks and our | |
| regional SBA representative. We have had four very successful | |
| loans through SBA and all repaid ahead of schedule. The bottom | |
| line, all three banks turned us away. How could we fulfill our | |
| obligation to this contract without financial backing? | |
| We looked for other sources of revenue. We learned of an | |
| economic development grant offered by our city. We applied and | |
| received 1/3 of the necessary funds needed. We made due, | |
| equipping only one kitchen and pulling used small wares from | |
| our catering operation. We halted a remodel to our main | |
| catering facility to accommodate the additional inventory and | |
| servicing the theater. We used much of our profits from 2016 to | |
| purchase the most critical items with the hope that 2017 would | |
| be a good enough year to see us through any additional | |
| challenges. It left us with little working capital and no | |
| reserves. It simply should not be this hard for businesses to | |
| get access to the capital they need. | |
| Competitive Workforce | |
| In his State of American Business address, the President & | |
| CEO of the U.S. Chamber of Commerce, Tom Donohue, expressed his | |
| concern regarding a competitive workforce. He stated, ``A well- | |
| trained, well-educated workforce is also critical to driving | |
| economic growth--and to making sure all Americans have a | |
| genuine opportunity to share in that growth. ...[W]e need to | |
| help young people, as well as adults who need retraining, | |
| obtain credentials--degree, certificate, or otherwise--that are | |
| valued in the labor market. We need to encourage work-based | |
| learning opportunities and develop more partnerships between | |
| local business communities and local educators.'' \3\ | |
| --------------------------------------------------------------------------- | |
| \3\ Tom Donohue, 2017 State of American Business Address, U.S. | |
| Chamber of Commerce (January 11, 2017), available at: https:// | |
| www.uschamber.com/speech/2017-state-american-business-address. | |
| The lack of a skilled workforce is challenging for all | |
| businesses no matter the size. For small businesses, access to | |
| job seekers with the skillset needed is a tedious and time- | |
| consuming task. When the Goldman Sachs 10,000 Small Business | |
| initiative partnered with Babson College to study small | |
| business issues, they discovered that over 70 percent of small | |
| businesses find it difficult to hire qualified employees.\4\ | |
| The main reason cited was that potential candidates lack the | |
| requisite skillsets.\5\ | |
| --------------------------------------------------------------------------- | |
| \4\ Babson College, The State of Small Business in America 2016 | |
| (June 24, 2016), available at: http://www.goldmansachs.com/citizenship/ | |
| 10000-small-businesses/US/news-and-events/babson-small-businesses/ | |
| multimedia/babson-state-of-small-business-in-america-report.pdf. | |
| \5\ Id. | |
| I commend the U.S. Chamber of Commerce and its efforts to | |
| address these issues. A priority for the Chamber is to improve | |
| the workforce system by working with Congress to reauthorize | |
| the Carl D. Perkins Career and Technical Education Improvement | |
| Act of 2006. The law's reauthorization will help ensure | |
| alignment between career and technical education (CTE) and | |
| other workforce development laws, such as the Workforce | |
| Innovation and Opportunity Act. Also, reauthorization will | |
| continue the strong emphasis of developing CTE programs with | |
| employer input, that reflect regional labor market needs, and | |
| that are relevant and meaningful for students by providing them | |
| with a path to a postsecondary degree or certificate or to | |
| --------------------------------------------------------------------------- | |
| high-skilled, high-paying jobs. | |
| Another Small Business Council member, Ashok Krish, is a | |
| good example of how small tech firms are struggling to keep up | |
| with staffing needs. Ashok is the owner of Kaizen Technologies | |
| in Edison, New Jersey. There are over 3,000 IT firms in the | |
| tri-state area and his needs for highly skilled workers cannot | |
| be met without a reliance on foreign professionals who can work | |
| for him under the H-1B Visa program. Like many small business | |
| owners, Ashok works with his state's labor department and | |
| assists in training programs for those returning to the | |
| workforce. Even with his networking, good will, and resources | |
| devoted to training potential hires, Ashok needs to utilize the | |
| H-1B Visa program so he can fill the technical positions he has | |
| available to meet the growing demand for these skills. | |
| Many small businesses have partnered with trade schools | |
| offering their students paid internships. Large corporations | |
| are offering recent high school graduates good pay with on-the- | |
| job training with a guarantee of a high-paying job upon | |
| completion of their education. Small business owners are | |
| feeling the pressure that their future workforce will no longer | |
| be available. | |
| Regulations | |
| A supportive regulatory environment is essential to protect | |
| the general public and help guide sound business practices. | |
| Over regulation is burdensome and the recent upsurge in | |
| regulations over the past several years has left business | |
| owners overwhelmed and concerned. | |
| As noted by J.D. Foster, Chief Economist for the U.S. | |
| Chamber of Commerce, ``Regulations have costs that go far | |
| beyond the simple calculations presented. They also create | |
| uncertainty among affected businesses as they wait for the | |
| regulations to come out, become final, and then become | |
| internalized within the business. Perhaps even more important, | |
| when businesses are subject to such an onslaught of regulations | |
| in complete disregard to the economic damage they inflict, and | |
| especially in combination with other policies such as the | |
| administration's enacted and proposed anti-growth tax policies, | |
| the net result is to create at least the appearance of an | |
| antagonistic attitude toward businesses. Businesses can then | |
| become overly cautious and defensive and these consequences | |
| appear in the declining business investment in [the middle two | |
| quarters of 2016].'' \6\ | |
| --------------------------------------------------------------------------- | |
| \6\ J.D. Foster, Declining Labor Productivity; Both a Symptom and a | |
| Warning, U.S. Chamber of Commerce, Above the Fold (August 11, 2016), | |
| available at: https://www.uschamber.com/above-the-fold/declining-labor- | |
| productivity-both-symptom-and-warning. | |
| The Chamber has heard loudly from its small business | |
| members about the problems with the torrent of federal | |
| regulations emanating from Washington, DC. Research conducted | |
| by the U.S. Chamber of Commerce Foundation probes into the | |
| costs of red tape on small business and spells out how the $1.9 | |
| trillion annual cost of federal mandates is a drag on the | |
| American economy. The Foundation study includes a survey of | |
| leaders from local chambers of commerce who are alarmed by the | |
| slump in new business startups and insist that federal | |
| regulations are largely to blame.\7\ | |
| --------------------------------------------------------------------------- | |
| \7\ Michael Hendrix, Regulations Impact Small Business and the | |
| Heart of America's Economy, U.S. Chamber of Commerce Foundation, Above | |
| the Fold (March 14, 2017), available at: https:// | |
| www.uschamberfoundation.org/blog/post/regulations-impact-small- | |
| business-and-heart-americas-economy. | |
| I am proud of the members of the Chamber's Small Business | |
| Committee for voicing concerns to agencies and to Congress | |
| about problems with red tape. From the overtime rule to the | |
| fiduciary rule to minimum wage thresholds and problems with the | |
| Affordable Care Act, we have worked with policy committees at | |
| the Chamber and have testified before your Committee and others | |
| to try and bring some ``Main Street common sense'' to | |
| --------------------------------------------------------------------------- | |
| regulatory policy decisions here in our nation's capital. | |
| I also greatly appreciate this Committee's work to address | |
| the problems associated with unnecessary, duplicative, or | |
| excessive federal red tape by guaranteeing that small business | |
| stakeholders like me have a place at the table when regulatory | |
| decisions are made. That is the concept embodied in H.R. 33, | |
| the Small Business Regulatory Improvements Act that passed the | |
| U.S. House of Representatives. I hope the Senate takes up the | |
| measure soon. | |
| Closing Remarks | |
| In closing, Tom Donohue, in his January State of American | |
| Business Address, said, ``if we are able to move our economy | |
| from 2 percent growth to 3 percent growth, that's not a one | |
| percent increase in our performance--it's a 50 percent | |
| increase. Yet ultimately, growth is not about numbers. Growth | |
| is about people. Increasing our growth rate 50 percent or more | |
| would have an extraordinarily positive impact on jobs, incomes, | |
| and opportunities--not just for the few, but for the many.'' | |
| \8\ | |
| --------------------------------------------------------------------------- | |
| \8\ Tom Donohue, 2017 State of American Business Address, U.S. | |
| Chamber of Commerce (January 11, 2017), available at: https:// | |
| www.uschamber.com/speech/2017-state-american-business-address. | |
| New opportunities for entrepreneurs, beginning with tax | |
| reform, regulatory reform, and other priorities, would result | |
| in an economic vigor that would benefit every family across | |
| this country. A health care program that meets the needs of our | |
| citizens with reasonable costs would spark new optimism. We | |
| understand the serious work that must be done to solve many of | |
| these issues. We are here to support and work with you to | |
| --------------------------------------------------------------------------- | |
| stroke an economy where opportunities abound. | |
| Thank you for the opportunity to speak with you today and I | |
| look forward to any questions you may have. | |
| [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] | |
| Good morning. Chair Chabot, Ranking Member Velazquez and | |
| distinguished Members of the Committee, thank you for the | |
| opportunity to testify. My name is Anne Chambers, and I am the | |
| owner of two businesses in Cincinnati, Ohio - Red212, an | |
| independent content strategy agency that offers digital, | |
| traditional, and cultural solutions, and Jambaar, a video | |
| creation company providing data and technology for business | |
| growth. | |
| Today, I am here representing Women Impacting Public Policy | |
| (WIPP), an organization of which I am a member. WIPP is a | |
| national nonpartisan organization advocating on behalf of women | |
| entrepreneurs - strengthening their impact on our nation's | |
| public policy, creating economic opportunities, and forging | |
| alliances with other business organizations. | |
| First, let me thank the Committee for holding this hearing. | |
| WIPP is appreciative of the bipartisan efforts of this | |
| Committee to advance the agenda of women entrepreneurs | |
| including accessing capital, accessing federal markets, and | |
| providing a business-friendly environment. | |
| Few topics are as timely as today's hearing: Making | |
| Washington Work for America's Small Businesses, as women | |
| business owners are a strong economic force that make up a | |
| third of all American businesses. We are growing at a rate four | |
| times the rate of male owned firms, and contribute over $1.6 | |
| trillion dollars to the nation's economy.\1\ | |
| --------------------------------------------------------------------------- | |
| \1\ 10 Million Strong: The Tipping Point for Women | |
| Entrepreneurship: 2015 Annual Report. National Women's Business Council | |
| (2015). | |
| To provide information on the issues most important to | |
| women entrepreneurs, WIPP has prepared an economic blueprint | |
| which sets a bold, comprehensive set of public policy | |
| expectations on behalf of the women's entrepreneurship | |
| community. The Economic Blueprint expresses our voice and our | |
| interests regarding the pressing business challenges that | |
| require action by our elected officials. My testimony outlines | |
| --------------------------------------------------------------------------- | |
| many of the blueprints core principals. | |
| Economy | |
| Government and private sector efforts should be focused on | |
| increasing investments that drive economic growth. Policymakers | |
| are responsible for ensuring the business environment is | |
| conducive to growth and that the federal government is a wise | |
| steward of tax payer dollars. | |
| 1) Investment in Entrepreneurship Pays Off | |
| Over 36% of American businesses are women-owned, a segment | |
| growing at four times the rate of men-owned businesses.\2\ | |
| Critical support for these entrepreneurs includes access to | |
| credit, access to the federal sector and access to training and | |
| counseling. Doing so maximizes their already sizable impact: | |
| contributing $1.6 trillion annually to the economy and | |
| employing nearly 9 million Americans.\3\ | |
| --------------------------------------------------------------------------- | |
| \2\ Id. | |
| \3\ Id. | |
| 2) Provide Women-Owned Businesses with Certainty in | |
| --------------------------------------------------------------------------- | |
| Economic Policy and Regulations | |
| Federal regulations cost businesses just under $10,000 per | |
| employee annually, with the annual total cost burden on the | |
| typical U.S. business coming in at a $233,182.\4\ This problem | |
| is exacerbated by the government's inability to provide long- | |
| term policies on which businesses can rely. Whether it is the | |
| continued threat of government shutdown in the annual budget/ | |
| debt ceiling debate, steep spending cuts across the government, | |
| or even retroactive tax credits, women entrepreneurs are often | |
| left to guess at government outcomes affecting their | |
| businesses. | |
| --------------------------------------------------------------------------- | |
| \4\ W. Mark Crain and Nicole V. Crain, ``The Cost of Federal | |
| Regulation to the U.S. Economy, Manufacturing and Small Business,'' | |
| National Association of Manufacturers (September 2014). | |
| WIPP appreciates the support of this committee to ease the | |
| regulatory burden on small businesses. In particular, we would | |
| like to thank Members of the Committee for their support of the | |
| --------------------------------------------------------------------------- | |
| following legislation: | |
| H.J. Res 37, which nullifies the Federal Acquisition | |
| Regulation (FAR) contractors blacklisting rule. While the | |
| intent of the rule, to keep bad actors from doing business with | |
| the government, is good, the execution was too burdensome for | |
| contractors. | |
| H.J. Res 83, which nullifies the Department of Labor (DOL) | |
| rule that would enable the agency to cite employers for record- | |
| keeping violations up to five years old. | |
| The Regulatory Accountability Act (H.R. 5), which would | |
| strengthen the Small Business Administration (SBA) Office of | |
| Advocacy and allow for the issuance of smarter, less burdensome | |
| regulations that consider the direct economic effects on small | |
| businesses. | |
| The Regulations from the Executive in Need of Scrutiny | |
| (REINS) Act (H.R. 26), which would send new rules that will | |
| have a significant impact on the economy to Congress for an up | |
| or down vote before they can be implemented. | |
| Tax | |
| A Congressional tax overhaul should include an equitable | |
| reform of tax rates for all businesses. Given that 90% of all | |
| businesses in the U.S. are pass-through, entities, reform | |
| should address the individual as well as the corporate tax | |
| rate.\5\ On the Federal level, pass-through entities are | |
| subject to a top individual tax rate of 43.4% and up to an | |
| additional 13.3% for state and local taxes.\6\ | |
| --------------------------------------------------------------------------- | |
| \5\ Scott Greenberg, ``Pass-Through Businesses: Data and Policy,'' | |
| Tax Foundation, (January 17, 2017). | |
| \6\ Id. | |
| --------------------------------------------------------------------------- | |
| WIPP supports: | |
| <bullet> Reforming the tax code to make deductions | |
| and credits equitable no matter what the structure of | |
| the company | |
| <bullet> Permanently repealing the estate tax and | |
| allowing small businesses to pass from one generation | |
| to the next | |
| <bullet> Simplifying the tax code for small | |
| businesses to reduce the imbalanced cost of compliance | |
| versus large businesses | |
| Access to Capital | |
| Capital is the lifeline of business and the ability to | |
| secure capital is often the determinant of an entrepreneur's | |
| opportunity to start or grow a business. For women, however, | |
| accessing capital continues to be difficult. Women-owned | |
| businesses ask for less funding - on average, $35,000 dollars | |
| less than male-owned counterparts.\7\ Yet, women receive just | |
| 16% of all small business loans made each year.\8\ A | |
| Congressional report on women entrepreneurs found that women | |
| only receive 4% of all commercial loan dollars.\9\ | |
| --------------------------------------------------------------------------- | |
| \7\ Jared Hecht, ``State of Small Business Lending: Spotlight on | |
| Women Entrepreneurs,'' Fundera Ledger (September 6, 2016). | |
| \8\ Id. | |
| \9\ U.S. Senate Committee on Small Business and Entrepreneurship, | |
| Majority Report, 21st Century Barriers to Women Entrepreneurship (July | |
| 23, 2014). | |
| WIPP's annual membership survey regularly finds that women | |
| must make multiple attempts to secure bank loans or lines of | |
| credit - with a full 40% never succeeding. Yet, women make up | |
| one-third of business owners, generating more than $1.6 | |
| trillion annually in receipts, and growing at 1.5 times the | |
| rate of average businesses.\10\ | |
| --------------------------------------------------------------------------- | |
| \10\ Supra, note 1. | |
| In response to this crisis of capital, WIPP proposes the | |
| following policy-based solutions to spur lending to fuel the | |
| --------------------------------------------------------------------------- | |
| innovation and success of women entrepreneurs. | |
| 1) Changing the Capital Infrastructure | |
| Simplify Intellectual Property Protections | |
| Traditional and alternative investors are increasingly | |
| interested in the intellectual property (IP) value of companies | |
| seeking funds. Women entrepreneurs, however, lag significantly | |
| behind male counterparts in filing patents.\11\ Additionally, | |
| simplifying the IP patent process for entrepreneurs will | |
| catalyze interest in investment smaller firms. | |
| --------------------------------------------------------------------------- | |
| \11\ Margaret E. Blume-Kohout, ``Understanding the Gender Gap in | |
| STEM Fields Entrepreneurship,'' SBA Office of Advocacy (October 2014). | |
| --------------------------------------------------------------------------- | |
| Re-think Credit Scores | |
| Lending decisions relying on credit scores, employment | |
| history and income are undermined by the many studies that show | |
| women lag behind male counterparts in pay.\12\ Beyond pay | |
| discrepancy, antiquated scoring models disproportionately | |
| hinder women entrepreneurs seeking loans. | |
| --------------------------------------------------------------------------- | |
| \12\ The Simple Truth About the Gender Pay Gap, American | |
| Association of University Women (2017). | |
| FICO introduced in 2014, and adopted in 2016, an | |
| alternative credit scoring system that would allow up to 15 | |
| million previously ``unscorable'' Americans to be scored based | |
| on alternative data. This includes payment histories, utility | |
| bills, cable bills, cellphone bills, and public record | |
| information (e.g., address history). This alternative scoring | |
| model may also help give lower lending rates based on a higher | |
| credit score. These modernizations in the credit industry hold | |
| great promise for women entrepreneurs and should be utilized in | |
| --------------------------------------------------------------------------- | |
| government lending programs. | |
| Develop Female Fund Managers through ``Emerging Managers'' | |
| SBIC Program | |
| Venture capital (VC) continues to be elusive to women who | |
| need it. Less than 10% of overall VC funding goes to women- | |
| owned companies.\13\ Data from Small Business Investment | |
| Companies (SBICs) licensed by the SBA, show women receive only | |
| 3% of investments.\14\ Few fund managers are women. In a | |
| classic ``chicken and egg problem,'' many women cannot gain the | |
| requisite portfolio managing experience to become a fund | |
| manager, leading to a cyclical exclusion of women managers-- | |
| ultimately preventing women from lending to women. | |
| --------------------------------------------------------------------------- | |
| \13\ JMG Consulting, LLC & Wyckoff Consulting, LLC, Venture | |
| Capital, Social Capital, and the Funding of Women-led Businesses, SBA | |
| Office of Advocacy (April 2013). | |
| \14\ Annual Report Fiscal Year 2014, The Small Business Investment | |
| Company Program (2014). | |
| Creating an ``Emerging Managers'' track in the SBIC program | |
| and allowing these managers to engage in equity-based financing | |
| would help develop a generation of female fund managers, who in | |
| --------------------------------------------------------------------------- | |
| turn would increase the VC opportunities for women-owned firms. | |
| Tax Incentives for Angel Investors | |
| According to the Angel Capital Association, an estimated | |
| 300,000 people have made an angel investment in the last | |
| several years.\15\ The same estimates found a potential of 4 | |
| million investors nationwide. Incentivizing this kind of | |
| capital should be a priority. | |
| --------------------------------------------------------------------------- | |
| \15\ FAQ: The Value of Angel Investors and Angel Groups, Angel | |
| Capital Association (2013). | |
| More than half of U.S. states offer tax incentives for | |
| angel investors.\16\ Creating a federal tax credit mirroring | |
| state models, would increase angel investment at the critical | |
| early stage, such as Connecticut's. Federal support could | |
| include: grants, matches, or a dedicated fund. Additionally, to | |
| the extent possible, tax credits could be designed to | |
| incentivize angel investment in women-owned businesses. | |
| --------------------------------------------------------------------------- | |
| \16\ State Angel Investor Tax Incentive Programs, Angel Capital | |
| Association (accessed March 16, 2017). | |
| --------------------------------------------------------------------------- | |
| 2) Supporting Small Lending Institutions | |
| Ending a ``One-size-fits-all'' Approach to Regulation | |
| Currently, banks and credit unions of all sizes largely | |
| face the same requirements under Dodd-Frank reforms. Small | |
| regional and community banks have the highest approval rate for | |
| small business loans. For example, community banks lent $2.6 | |
| trillion in loans to consumers, small businesses and the | |
| agricultural community.\17\ Yet, community banks have struggled | |
| with compliance and the regulatory environment that allows them | |
| to lend to small businesses. Congress should enact legislation | |
| to address the regulatory relief needed for smaller lending | |
| institutions. | |
| --------------------------------------------------------------------------- | |
| \17\ Independent Banker 2017 Media Guide, Independent Community | |
| Bankers of America (2017). | |
| --------------------------------------------------------------------------- | |
| Lift the Credit Union Lending Cap | |
| A cap limits most credit unions to lending no more than | |
| 12.25% of their assets to small businesses.\18\ Credit unions | |
| could lend an additional $16 billion to small businesses if | |
| Congress increased the statutory cap on credit union business | |
| lending. | |
| --------------------------------------------------------------------------- | |
| \18\ H.R. 1151, 105th Cong. (1998). | |
| --------------------------------------------------------------------------- | |
| 3) Strengthening Government Investment | |
| Accelerate SBIR Commercialization | |
| Innovative products are developed for government use | |
| through the Small Business Innovation Research (SBIR) program, | |
| which has three phases. Federal support generally ends after | |
| the second phase of meeting the government needs. The | |
| Department of Defense (DoD) has successfully utilized the Rapid | |
| Innovation Fund (RIF) to commercialize SBIR technology. A RIF | |
| fund should be created at all federal agencies conducting | |
| research and development, to enable the government to purchase | |
| innovative products and services from small businesses. | |
| Additionally, agencies could also model the third stage | |
| commercialization of SBIR products on a public-private | |
| partnership to bring a pipeline of innovative products - | |
| already proven for government use - to market. | |
| Modernizing the SBA Microloan Program | |
| Women are the biggest users of loans under $50,000, | |
| accounting for 45.2% of loans made through the SBA Microloan | |
| Program in Fiscal Year 2016.\19\ Not only should Congress | |
| continue to fund this program, they should also modernize it. | |
| WIPP looks forward to working with this Committee to remove | |
| limitations on technical assistance and allow for funds to be | |
| distributed more effectively. | |
| --------------------------------------------------------------------------- | |
| \19\ U.S. Congressional Research Service, Small Business | |
| Administration Microloan Program (R4 1057, Dec. 6, 2016) by Robert Jay | |
| Dilger. | |
| Provide Adequate Resources for Financial & Business | |
| --------------------------------------------------------------------------- | |
| Counseling | |
| Obtaining assistance and coaching is the first key step in | |
| the capital access process. Businesses that receive assistance | |
| have an 80% success rate, compared to the 50-80% mortality rate | |
| for small businesses overall.\20\ | |
| --------------------------------------------------------------------------- | |
| \20\ Briding the ``Pioneer Gap'': The Role of Accelerators in | |
| Launching High Impact Enterprises, Aspen Network of Development | |
| Entrepreneurs (accessed March 21, 2017). | |
| Congress should adequately support organizations such as | |
| Women's Business Centers, Small Business Development Centers, | |
| and other non-profits that provide financial counseling and | |
| prepare women to obtain capital. Traditionally funded by the | |
| Small Business Administration, the Department of Agriculture, | |
| and the Department of Treasury, investing in these programs | |
| will ensure that business owners receive the coaching they need | |
| --------------------------------------------------------------------------- | |
| to be a part of the 80% of businesses that succeed. | |
| WIPP appreciates the efforts of this committee to enable | |
| women entrepreneurs to secure the capital necessary to start | |
| and expand businesses. We look forward to working with this | |
| Committee to make changes necessary to support all | |
| entrepreneurs. | |
| Procurement | |
| In FY2015, for the first time, 5.06% of all government | |
| contracts were awarded to women-owned businesses.\21\ While | |
| reaching the contract goal is certainly a milestone, a report | |
| issued by the U.S. Department of Commerce showed that women- | |
| owned businesses are still 21% percent less likely than male | |
| counterparts to be awarded a federal contract.\22\ Below are | |
| WIPP's suggestions to correct that inequity. | |
| --------------------------------------------------------------------------- | |
| \21\ SBA Press Release: Federal Government Breaks Contracting | |
| Record for Women-Owned Small Businesses (March 2, 2016) available at | |
| https://www.sba.gov/about-sba/sba-newsroom/press-releases-media- | |
| advisories/sba-federal-government-breaks-contracting-record-women- | |
| owned-small-businesses. | |
| \22\ David N. Beede, Robert N. Rubinovitz, Utilization of Women- | |
| Owned Business in Federal Prime Contracting, Report Prepared for the | |
| Women-Owned Small Business Program of the Small Business Administration | |
| (December 31, 2015). | |
| 1) Ensure Acquisition Reforms Support Women-Owned | |
| --------------------------------------------------------------------------- | |
| Businesses | |
| Last year, WIPP published a report, Do Not Enter: Women | |
| Shut Out of U.S. Government's Biggest Contracts. The report | |
| showed that women have limited opportunities to win some of the | |
| government's largest contracts, also known as Multiple Award | |
| Contracts (MACs). We Urge Congressional action to require the | |
| SBA to conduct a comprehensive study on the participation of | |
| all small businesses on MACs. WIPP will work to ensure that | |
| agencies structure MACs to include all socio-economic groups, | |
| including women. | |
| The continued effort to implement broad reforms in | |
| government procurement has not fully taken into consideration | |
| the damaging impact on small businesses. WIPP urges Congress to | |
| ensure that procurement reforms, including government-wide | |
| acquisition initiatives like category management, take into | |
| consideration impacts on government contractors, while also | |
| supporting the government's fundamental goal of getting ``best | |
| value'' in federal procurement. | |
| 2) Adequately Support and Train the Contracting Workforce | |
| Procurement professionals struggle to keep up with changes | |
| to acquisition policy. Often these changes are designed to | |
| benefit small, minority, or women-owned businesses. New | |
| contracting policies, like sole source authority in the WOSB | |
| Program, should be explained to the government acquisition | |
| workforce to ensure changes passed by Congress are fully | |
| utilized by federal buyers. | |
| 3) Sole Source Parity | |
| In 2015, WIPP pressed for--and achieved--the swift | |
| implementation of sole source authority to the WOSB Procurement | |
| Program. The WOSB sole source is limited to contracts valued at | |
| $6.5 million or less for manufacturing and $4 million or less | |
| for all other procurements.\23\ While the WOSB sole source was | |
| being finalized, the amount for manufacturing sole source was | |
| increased from $6.5 million to $7 million for other socio- | |
| economic groups. We urge the Committee to ensure that WOSB sole | |
| source for manufacturing is also raised to $7 million. | |
| --------------------------------------------------------------------------- | |
| \23\ 80 C.F.R. Sec. 251 (2015). | |
| --------------------------------------------------------------------------- | |
| Healthcare | |
| Small businesses face higher administrative and premium | |
| costs for health insurance. This puts women entrepreneurs at an | |
| inherent disadvantage, as health insurance is an important | |
| benefit to attract and retain employees. Congress and the | |
| Administration should implement the healthcare reforms | |
| targeting this inequity. | |
| 1) Implement a Strong Pooling Mechanism for the Small Group | |
| Market | |
| The Affordable Care Act (ACA) established SHOP exchanges, | |
| but only on a statewide basis. Prior to the ACA, WIPP supported | |
| the concept of Association Health Plans (AHPs), which would | |
| have allowed small businesses to pool their buying power | |
| through associations in order to purchase healthcare across | |
| state lines. While WIPP supported the mechanism of state | |
| exchanges in the ACA, WIPP urges Congress to consider | |
| structuring the purchasing pools to maximize small business | |
| participation by revisiting the ability to shop across state | |
| lines. | |
| 2) Define Work Weeks as 40 hours | |
| The Affordable Care Act defined a full-time worker as | |
| working thirty hours a week. The definition matters for | |
| defining whether a business is exempt from the employer mandate | |
| (under 50 FTEs is exempt). WIPP supports efforts to define the | |
| workweek traditionally, as forty hours. When revising health | |
| care legislation, WIPP urges Congress to define the workweek as | |
| 40 hours, if the employee mandate is retained. | |
| 3) Allow Health Insurance Deductions for the Self-Employed | |
| WIPP supports reforming the tax code to make deductions and | |
| credits equitable, no matter what the structure of the company. | |
| WIPP looks forward to working with Congress to ensure that | |
| any reform to health care addressed challenges for women | |
| business owners. | |
| Conclusion | |
| Opportunities for the nation's ten million women | |
| entrepreneurs have never been stronger, but challenges still | |
| remain. WIPP's economic blueprint outlined in this testimony, | |
| provides solutions to improve in a number of key areas | |
| including: tax, access to capital, health care, and | |
| procurement. This Committee has always acted in a bipartisan | |
| manner to support women entrepreneurs and we appreciate your | |
| interest in our input, making sure that the challenges of women | |
| entrepreneurs are considered. | |
| Thank you for the opportunity to testify and I am happy to | |
| answer any questions. | |
| [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] | |
| Mr. Chairman and distinguished Members, thank you for | |
| inviting me to present testimony before the Committee regarding | |
| my company. | |
| I am a fourth generation florist. In 1923, my great- | |
| grandfather opened a flower shop and greenhouses outside | |
| Baltimore where he grew and sold flowers and plants. My | |
| grandparents took over the business in the 1950's and ran it | |
| until my parents took over in the 1970's. | |
| When I joined the business in a full-time capacity in 2002, | |
| our family owned two retail flower shops and had just under 20 | |
| total employees, of which 8 were considered full-time. Soon | |
| thereafter, I realized there was an opportunity to grow our | |
| business by acquiring additional locations. In 2007, I | |
| purchased my first location and have continued to acquire | |
| retail flower shops. | |
| In 2009, we expanded beyond traditional retail to include a | |
| wholesale florist and import division. Last year my company | |
| employed over 180 people and operated at 12 different locations | |
| in Maryland and New Jersey, including my great-grandfather's | |
| original location outside Baltimore. | |
| My company employs about 90 people on any given day--about | |
| 25 full-time and 65 part-time. Seasonal increases for the peak | |
| periods of Valentine's Day, Mother's Day, and Christmas will | |
| almost double our daily workforce. | |
| Our operation is multi-channel--we service import, | |
| wholesale, and drop-ship segments of the floral industry. | |
| However, our main street retail existence remains our largest | |
| presence within the flower business. Through our local brands, | |
| we deliver smiles to the faces of nearly 100,000 people each | |
| year. Our company receives numerous awards every year at both | |
| the local level as well as the national level. | |
| Our employees are the heart of our business. They are the | |
| ones who comfort grieving families, share hugs with new | |
| grandparents, and see true love between couples preparing for | |
| weddings. We have always taken care of our employees. | |
| We were offering health care decades before Affordable Care | |
| Act (ACA) required us to. We established a company-sponsored | |
| retirement plan when we realized that Social Security might not | |
| be enough for our retirees. We have a paid leave program that | |
| is extremely competitive for retail business and nearly unheard | |
| of in the floral industry. | |
| As a result, we have many valued employees who have made a | |
| lifelong career with us. It is important to note that our | |
| company attracts talent by offering competitive wages and | |
| benefits because we want to, not because we are forced to. | |
| Having the opportunity to set ourselves higher than required | |
| allows us to maintain a competitive employment environment. | |
| While the overall economy is certainly in better shape than | |
| it was several years ago, it is important to understand that | |
| our industry and small businesses all over the nation are still | |
| experiencing significant challenges which are preventing | |
| entrepreneurs from fully attaining the American Dream. | |
| Since several years have elapsed since full implementation | |
| of the ACA, we have had an opportunity to see firsthand the | |
| devastating impacts that have occurred as a result of the | |
| legislation. I want to share my experience with the ACA in an | |
| effort to encourage Congress to pass legislation to correct the | |
| devastating impacts the ACA has had on my business and ability | |
| to offer quality health care insurance to my employees. | |
| It is important to note that while I support employer- | |
| sponsored health care for true full-time employees as evidenced | |
| by my company's insurance offerings for multiple decades, the | |
| current mandate for employer-sponsored health care simply is | |
| not working. | |
| I received renewal quotes from our health insurance broker | |
| a few weeks ago. Our premiums will be increasing by over 30%, | |
| and the past several years have seen similar surges. Increases | |
| of that magnitude are simply not sustainable. Since the | |
| enactment of the ACA, our monthly premiums have nearly doubled | |
| and our deductibles have nearly tripled. | |
| In my opinion, it is not wise federal policy to force us to | |
| pay significantly more for substantially less coverage. | |
| In addition to skyrocketing costs and reductions in | |
| benefits, the ACA has placed me at a competitive disadvantage | |
| because of the cost of insurance. The actual employer's cost to | |
| insure a full-time employee on our health insurance policy adds | |
| over $2.00 an hour that ACA defined ``small employer'' | |
| competitors do not incur. This burden places me at a | |
| disadvantage since many other employers are not required to | |
| offer coverage to the same individual and can therefore afford | |
| to entice them with a higher salary. | |
| For an hourly-based employee making $14 an hour, that $2 an | |
| hour is a significant monetary factor and often times makes the | |
| difference between working for us and taking a job elsewhere. | |
| Additionally, since many other employers are not required to | |
| offer coverage to their employees, the employee can still | |
| benefit from subsidies on the exchange which they would not | |
| have access to under employment with me. The result is a | |
| variance in net expendable income to an employee of thousands | |
| of dollars a year, which to someone making $20,000-$30,000 a | |
| year creates a significant difference of their income. | |
| I ask Congress to fix the broken ACA system. It is | |
| detrimental to me and countless other main street businesses. | |
| If something is not done quickly, I fear that when I receive | |
| next year's health insurance quote it will simply be | |
| unaffordable to the point where we would no longer be able to | |
| offer that benefit to our employees. | |
| I applaud the recognition by Congress and the | |
| Administration that the Tax Code, which seems to be so large | |
| that not even my accountant can fully understand it, needs to | |
| be drastically simplified. | |
| Tax relief to small business is incredibly important. The | |
| complexity of the Tax Code and its associated case law is not | |
| something that I can even begin to understand. Payroll taxes | |
| are simple, straightforward to calculate, and easy to plan | |
| for--we need something just as uncomplicated for corporate and | |
| pass-through taxes. | |
| The tax rate also needs to be lowered. The United States | |
| has the highest corporate tax rate in the developed world and | |
| its obviously too high. Our current tax system discourages | |
| hiring and growth. The high tax rate forces businesses to make | |
| decisions on how lower their net tax rate rather than how to | |
| grow their businesses and hire more employees. | |
| While I highly commend efforts to reform our tax code, the | |
| border adjustment proposal would be devastating to my business. | |
| Eighty percent of the flowers sold in the United States are | |
| imported. Nearly 95% of the flowers used in my businesses are | |
| grown overseas. There is no domestic capacity to meet the | |
| demand. Flowers are not a necessity like food or housing--if | |
| our products are taxed at a higher rate, those costs will | |
| translate to higher prices and consumers will shift their | |
| spending to other products where flowers have traditionally | |
| been appropriate. | |
| I ask that any border adjustment in tax reform exempt | |
| floral agricultural products to avoid significant harm to small | |
| floral businesses nationwide. | |
| One of the greatest concerns that I and other members of my | |
| industry have is the sense of uncertainty and lack of clarity | |
| in legislation and regulations. It is impossible for small | |
| businesses to make decisions and plan when legislation and | |
| rules are constantly changing. I have discussed the challenges | |
| I face with several of my peers in different segments of the | |
| floral industry. Every single person told me their greatest | |
| concern was either uncertainty or lack of clarity. | |
| For example, when regulations changing overtime policy were | |
| issued, I, along with many of my peers, recreated the entire | |
| compensation structures for our full-time employees to conform | |
| to the new regulations. | |
| Being in a somewhat seasonal business, we had previously | |
| offered our salaried employees the opportunity to bank extra | |
| hours worked during peak weeks and redeem them as additional | |
| paid time off during other slower periods. Our employees had | |
| always viewed this as a benefit that allowed them to maintain | |
| consistency in their cash flow throughout the year. | |
| Because the overtime rule forced us to restructure our | |
| compensation structure, our workplaces were highly disrupted. I | |
| even had one employee quit after we informed her that she would | |
| not be able to accrue comp time during peak weeks. Please try | |
| to imagine the frustration after we redesigned our compensation | |
| plan only to have the regulation halted just days before it was | |
| scheduled to go into effect. | |
| There needs to be certainty in legislation and regulation | |
| that allows small business owners to properly plan and prepare. | |
| The current environment creates economic chaos where we are | |
| unable to plan for payroll, benefits, or growth. | |
| One of the greatest uncertainties that I have rests in the | |
| handling of non-hard assets during acquisitions. There has been | |
| little released about how assets such as trade names, phone | |
| numbers, websites, and goodwill--normally depreciated over a | |
| longer period of time, minimizing any benefit--would be handled | |
| under any of the tax reform proposals being considered. I am | |
| not comfortable continuing to expand my business without | |
| knowing how those asset will be treated under a reformed tax | |
| system. Constant political upheaval and shifting rules are | |
| counterproductive to business growth. | |
| In an era where many people only criticize our government, | |
| I want to take an opportunity to say thank you. Recently a | |
| number of significant challenges have been overcome thanks to | |
| the support of our legislators. I urge the committee to | |
| celebrate these prior successes as we all work together to make | |
| the future brighter. | |
| While the Affordable Care Act remains substantially intact, | |
| there have been some requirements under the ACA which have been | |
| reviewed and changed to assist small businesses. For example, | |
| the original ACA legislation required 1099 reporting | |
| requirements which would have been overly burdensome, | |
| especially on small business. Through bi-partisan cooperation, | |
| this burdensome provision was removed. I am hopeful that | |
| Members of Congress will continue to work to eliminate many of | |
| the other tedious reporting provisions with which small | |
| businesses have struggled. | |
| The Estate Tax has been an ongoing issue for small | |
| business, especially in multi-generational businesses where the | |
| business itself sits upon real estate which has been passed | |
| down from one generation to the next. | |
| I applaud the efforts over the years by legislators to keep | |
| Estate Tax levels at a level which allows for transition of | |
| small businesses from one generation to another without forcing | |
| family members to take out life insurance policies or loans to | |
| pay the taxes which might occur as a result of the death of a | |
| family member. I urge Congress to continue to maintain a | |
| vigilant watch on Estate Tax levels and concepts to allow for | |
| small businesses to continue to grow and pass from one | |
| generation to the next without fear of losing the business from | |
| a tax liability incurred by the death of an owner. | |
| Following the recession a decade ago, financing for my | |
| business became very difficult. Credit lines were cut or closed | |
| and it was nearly impossible to find a bank that was able to | |
| write a loan for small business. I have been fortunate to have | |
| a local community bank to work with--one who knows us as people | |
| and a business, not just an account number. Policies should | |
| encourage the continuity of small and local banks as a | |
| financing partner for small business. | |
| While Congress has passed legislation over recent years to | |
| help small business, the work remaining is immeasurable. I | |
| implore the Committee to be our voice in Washington and to | |
| craft legislation to address some of the concerns that I have | |
| shared with you. | |
| Small businesses should not be punished by their own | |
| government for contributing to economic growth and hiring | |
| employees. | |
| I am hopeful that this Committee and this Congress will act | |
| to give a degree of certainty and clarity to business and to | |
| craft and pass legislation which will lead small business into | |
| a new era of prosperity. I am hopeful that my great- | |
| grandchildren will be able to take the reins of the family | |
| business 94 years from now. I know that my 5-year old is | |
| already considering joining the business. | |
| Thank you again for giving me the opportunity to present | |
| this testimony before the Committee. | |
| Statement of David Borris, Main Street Alliance Executive | |
| Committee Member and Business Owner For House Committee on | |
| Small Business Hearing on ``Making Washington Work for | |
| America's Small Businesses.'' | |
| Wednesday, March 22, 2017 | |
| Chairman Chabot, Ranking Member Valezquez, and members of | |
| the committee: | |
| Thank you for the invitation to testify today regarding the | |
| ways our federal government can work for small business owners. | |
| My name is David Borris and I serve on the Executive | |
| Committee of the Main Street Alliance, a national network of | |
| small business owners. Our network creates opportunities for | |
| small business owners to speak for ourselves on matters of | |
| public policy that impact our businesses, our employees, and | |
| the communities we serve. | |
| I've been a small business owner for 32 years. My wife and | |
| I opened a homemade food store in 1985, and over the years have | |
| expanded into a full service catering company with 33 full-time | |
| employees and up to 80 more part-time and seasonal workers. We | |
| take great pride in what we do. | |
| Businesses need safety, transparency, and predictability in | |
| order to thrive. For today's discussion, I would like to focus | |
| on what Washington and the federal government can do to help | |
| ensure that those basic vital conditions are met so that my | |
| business, and small businesses across the country, can succeed. | |
| This starts with ensuring that my employees, my family, and | |
| I can access affordable, high-quality health coverage. With the | |
| passage of the Affordable Care Act (ACA), premium increases for | |
| my company stabilized immediately. My company is no longer | |
| vulnerable to dramatic spikes in premiums based on the health | |
| condition of a single employee, and there are now basic | |
| standards of accountability and coverage to ensure that my we | |
| are getting a fair deal. Instead of spending my time sifting | |
| through insurance plans or acting as an H.R. Director, I can | |
| devote my resources to innovating, growing my business, and | |
| producing more jobs. | |
| Second, the federal government has to ensure that we have | |
| sensible, protective regulations in place. My business relies | |
| entirely on a fundamental confidence that the food and water we | |
| consume is safe because of government regulations and effective | |
| oversight. Small business owners like myself also benefit from | |
| federal financial protections, which, as we know, are even more | |
| scarce for us than on the consumer side. | |
| Finally, what businesses like mine require more than | |
| anything from our federal government are evidence-based | |
| policies that keep overall consumer demand strong. In short, I | |
| need the bell on the front door to keep ringing, and that | |
| depends on a prosperous middle class with enough disposable | |
| income to spend on my goods and services. Policies like a fair | |
| $15 minimum wage, strong federal investment in infrastructure, | |
| and comprehensive immigration reform. | |
| Small Businesses Need Affordable, High Quality Health Care | |
| In 1992, when we began offering health care, we had grown | |
| to 8 full time employees, and felt a moral obligation to do | |
| right by the people who were making our life's work theirs as | |
| well. We implemented a structure whereby employees would | |
| contribute 50% of the premium in their first year of coverage, | |
| and Hel's Kitchen would pick up the entire program thereafter. | |
| We continued to grow and expand, and this structure worked well | |
| for some time. | |
| Beginning around 2002, though, we began to experience a | |
| series of annual, often volatile, premium increases. In 2004, | |
| it was a 21% increase; in 2005, 10%; 2006, 16%; 2007, 17%; and | |
| a change in carriers to avoid the quoted 26% increase. And in | |
| 2008, we were finally forced to ask long time employees to | |
| contribute more again because the 17% increase was simply too | |
| much for us to absorb. In 2008, I spent almost 13% of my | |
| covered employees' payroll on health insurance premiums. Now, | |
| that is down to a little over 9%. | |
| Runaway health care rates were a significant drain on my | |
| resources, as I witnessed insurance costs consuming an ever- | |
| increasing share of my business income. But even more | |
| challenging was the unpredictability of our premiums. Premiums | |
| could vary wildly from year to year depending on weather a | |
| single employee or family member had an expensive illness. | |
| For example, one of our lower wage employees, a dishwasher, | |
| was great at his job, but suffered from a malady that required | |
| kidney dialysis. When I met with my insurance broker to discuss | |
| the premiums for the upcoming year and I asked about the steep | |
| rise in my firm's premiums, he attributed the spike to the | |
| illness of that one single employee. | |
| The ACA has helped stabilize these costs and correct the | |
| market failures that have disproportionately burdened small | |
| business owners. This is one of the most direct ways to protect | |
| small businesses and help us do our part to create jobs and | |
| grow the economy. Insurers now are required to set rates using | |
| a single risk pool that includes all enrollees across their | |
| small group plans in the entire state. This means that my | |
| business is no longer vulnerable to sharp swings in my rates | |
| based on the health of a few employees. | |
| Furthermore, insurance companies can no longer underwrite | |
| based on health status--so no more charging higher premiums to | |
| groups with employees who have a condition requiring expensive | |
| treatment. Those costs now get spread over a much larger pool. | |
| And, after years of enduring double-digit rate increases with | |
| no recourse, insurers are now required to provide justification | |
| for unreasonable rate hikes. And, because of Medical Loss Ratio | |
| limits, insurance companies must pay back any excess premiums | |
| collected at the end of the year. The health insurance industry | |
| is unique in its high level of market concentration, but now | |
| true competition--competition based on consumer value rather | |
| than cherry-picking risk pools from year to year--is now | |
| possible, because of the ACA. | |
| I see these gains in my bottom line. My company has | |
| witnessed an unprecedented slowdown in rate increases. Since | |
| the passage of the ACA, our average annual increases are a | |
| fraction of what they were before, averaging 4.6% for the seven | |
| years from 2010 to 2017. I am saving money on premiums, and I | |
| am plowing those savings back into business investment and job | |
| creation. | |
| The ACA also established minimum standards of coverage and | |
| clarity in the benefits of our plan. As a caterer, I am a | |
| foodservice professionals, not an insurance expert. I don't | |
| have the time or bandwidth to pore over countless health | |
| insurance plans. I want to know that any plan I purchase is a | |
| fair deal--and that means it covers the basic needs of my | |
| employees and my family, without surprises. Because of the | |
| changes brought by the ACA, I have the security to know that | |
| any plan I select will cover essential health benefits, | |
| including maternity care, mental health and substance use | |
| treatment and prescription drugs. My employees are now more | |
| likely to have affordable access to health care that can keep | |
| them healthy, and I can devote my time to growing my business | |
| instead of administering health care. | |
| Finally, I would be remiss if I don't address the enormous | |
| gains in insurance coverage outside of the small group market. | |
| For many of my colleagues just starting out their own | |
| businesses, the risks they are taking on the chance to succeed | |
| are daunting. But, thankfully, they no longer shoulder the | |
| added anxiety of being deemed uninsurable. | |
| The ACA and the individual marketplace it established are | |
| freeing aspiring entrepreneurs to go out on their own. They are | |
| taking advantage of this option. One in five Marketplace | |
| enrollees is a small business owner or sole proprietor, and | |
| small business owners are three times more likely to purchase | |
| Marketplace insurance. This, plus the expansion of Medicaid, | |
| has also provided insurance coverage to many employees working | |
| in small businesses, particularly those in the lower-wage | |
| service and food industries like mine. | |
| Currently, 6.1 million people who work in small businesses | |
| are enrolled in Medicaid, and 1.4 million employees have gained | |
| coverage through the Exchange. These coverage gains are | |
| significant steps to fostering an environment in which small | |
| businesses can grow. It means we have a healthier workforce. | |
| There is less demand on us as small business owners to | |
| administer health insurance programs--valuable time we can | |
| spend on improving our products. Most of all, the ACA has given | |
| businesses the freedom to choose what makes the most sense for | |
| their companies. | |
| Small Business Owners Need Sensible Regulations to Protect | |
| Them and Ensure Level Playing Field | |
| Ideological rhetoric blaming government regulations for | |
| slow small business growth is at an all-time high. Washington | |
| has introduced numerous bills and executive orders aimed at | |
| curbing regulations, saying that cutting them will be a | |
| stimulus to our economy. Yet, as a small business owner who | |
| deals with regulations on a daily basis, I believe these overly | |
| broad attacks on regulations are actually harmful for small | |
| business owners. An educated, more nuanced approach is deeply | |
| warranted. | |
| Let me begin with an obvious example close to home. I make | |
| my living in the catering industry. On a daily basis, multiple | |
| vendors deliver poultry, beef, and dairy products and fresh | |
| produce to my back door. While I'm careful to check the | |
| quantity or weight as it is delivered, and make certain the | |
| quality is high, I know that I can trust that safety of the | |
| food itself because of strong national industry regulations. If | |
| I served tainted food at a catering event, people would be | |
| hurt, my reputation would be shattered, and my business | |
| destroyed. And foodservice operations are some of the largest | |
| consumers of water in the country. We need powerful oversight | |
| of food and clean water regulations to stay in business. If | |
| Northbrook, Illinois were to ever go through what Flint, | |
| Michigan went through, I would be out of business the next day. | |
| The same holds true for my fellow small business owners who | |
| operate toy stores, appliance showrooms, and machine shops. | |
| Both they and their customers trust that the products they sell | |
| are not defective or toxic, thanks to wise regulations. | |
| Regulations provide the market with an undergirding of | |
| confidence, a basic level of certainty to ensure we are | |
| protected from tainted food, unsafe drugs, poisoned water, and | |
| polluted air. We should not take these things for granted. We | |
| see the problems that occur in other countries lacking the | |
| stringent regulations that protect the public from the avarice | |
| of those who would compromise public safety for a little more | |
| short-term profit. | |
| There are other regulations that help small business owners | |
| by leveling the playing field against larger, more politically | |
| connected, businesses. Anti-trust laws, for instance, give | |
| small companies like mine a chance to compete by addressing | |
| price discrimination, price fixing, and other unfair business | |
| practices. And other regulations enforced under the Small | |
| Business Administration ensure that small businesses are | |
| prioritized for a certain set of government contracts. | |
| Financial regulations that protect small business owners | |
| are equally vital. Many, small business owners use consumer | |
| financial products to fund their businesses, particularly | |
| through temporary slow periods. Small business owners turn to | |
| those types of loans, which are largely unfavorable and often | |
| predatory, in times of desperation. It is vital that we have | |
| transparent repayment terms, accurate credit reporting, and | |
| fair mortgage and short term lending rates. | |
| This doesn't mean the regulatory environment cannot be | |
| improved. Navigating the bureaucratic and legal obstacles to | |
| obtaining requisite permits or licenses is often difficult and | |
| burdensome. But most of these regulatory challenges reside at | |
| the local level. Cities, counties, and states have convoluted | |
| and slow processes for new businesses, often designed for far | |
| larger firms. Easing the burden will entail more coordination | |
| among the various government agencies to determine whether any | |
| processes can be combined. Washington can help by working with | |
| state governments to provide clearer, accessible resources for | |
| business owners seeking licenses and permits, and consolidating | |
| this information into a single source of access. It can also | |
| help by creating one-stop electronic filings of government | |
| paperwork. But all of this should be done in a careful manner | |
| that streamlines burdensome processes without stripping away | |
| vital protections for us, our employees, and our customer base. | |
| Small Business Owners Need Policies that Keep Consumer | |
| Demand Strong | |
| I would like to close by saying that I run my business in a | |
| local way. My entire client geography exists within a 150-mile | |
| radius of my central office. The single most important thing | |
| small business owners need to be successful and to create more | |
| jobs is more customers--more demand for our products and | |
| services. Not tax breaks. Not fewer regulations. Not less | |
| oversight. More customers. | |
| Thus we need evidence-based policies that ensure our local | |
| communities have a growing, thriving middle class that is not | |
| weighted down with excessive debt. These policies include a | |
| fair $15 minimum wage, strong federal investment in | |
| infrastructure, and reasonable immigration reform. | |
| While the off-shoring of jobs and a shift to overseas | |
| markets have helped large corporations capture record profits, | |
| a company like mine can't simply pull up stakes and relocate | |
| somewhere across the globe. The health of my business is tied | |
| to a healthy economy that has money circulating in a virtuous | |
| cycle of rising wages, consumer demand, and job creation. | |
| To accomplish this, we need, first and foremost, to raise | |
| the federal minimum wage. Henry Ford understood the link | |
| between well-paid employees and paying customers more than a | |
| century ago when he recognized his business would only succeed | |
| if his workers earned enough to buy the cars they were | |
| building, and he doubled their wages overnight. | |
| In our local economies, that same link applies: my | |
| business' fairly paid employee is my neighbor business' paying | |
| customer. When people in my neighborhood can't earn enough to | |
| keep up with the basics--things like buying food, making car | |
| repairs, or taking their family out to eat for a birthday or an | |
| anniversary--the entire local economy becomes unstable. And | |
| those families certainly aren't going to spend money on a | |
| caterer. That's bad for small businesses like mine, and that's | |
| bad for the economy as a whole. | |
| Second, the federal budget needs to prioritize adequate | |
| investment in local communities. This means putting dollars | |
| into regional infrastructure, funding trainings for the | |
| workforce, and creating financial stability for middle class | |
| families. But that spending needs to drive long-term dollars | |
| into the pockets of community workers. That is, it should not | |
| be spent on low-wage labor that scrapes more profit off the top | |
| because that profit is taken out of the community when the | |
| project is complete. With these types of balanced, regulated | |
| investments in our infrastructure, we'll have a stronger | |
| customer base and more resources, which creates a positive | |
| multiplier effect for small businesses everywhere. | |
| Unfortunately, the President's budget blueprint does little | |
| in this respect. It dramatically cuts infrastructure funding in | |
| the Department of Transportation, the Department of Housing and | |
| Urban Development, and the EPA; defunds job-training programs; | |
| and underfunds after-school care, higher education training, | |
| and childcare for working families. These cuts are concerning | |
| for the future of my business and my community. I urge you to | |
| reverse these proposed cuts, and to instead adequately fund | |
| national programs that boost the economy. | |
| Finally, sensible, comprehensive immigration reform is | |
| important for an inclusive, healthy middle class. This country | |
| is built on the innovation and drive of immigrants, and the | |
| foodservice industry relies on the labor of my peers from all | |
| over the world. In the 10th District of Illinois, there are | |
| 172,729 immigrant residents, including 5,766 entrepreneurs, | |
| paying $1.7 billion in taxes and with a spending power of $4.5 | |
| billion. | |
| Our current immigration and visa policies not only | |
| discourage international tourists and business travelers, but | |
| also hinder businesses from finding the workers on which their | |
| industry relies. Most of my hourly workforce are immigrants. We | |
| start them at 30% over the Illinois state minimum wage, and not | |
| only retain most workers for many years, but also give them a | |
| solid start to becoming powerful consumers in our local | |
| economy. | |
| Conclusion | |
| Small business owners are the engine of our economy, | |
| creating two-thirds of all new jobs. The role of Washington is | |
| to help create the basic market conditions so that small | |
| businesses like mine can thrive and compete on a level playing | |
| field with our larger competitors. It's hard to envision a | |
| future in which small businesses will continue to be the job | |
| creators and innovators of America without the basic conditions | |
| I've touched on here today. These include quality, affordable | |
| health care, protective regulations, and federal policies that | |
| support a strong middle class. We need Washington to maintain | |
| and build on the gains of recent years, especially in health | |
| care, in order to ensure that the small businesses like mine | |
| can continue to flourish. | |
| Thank you again for the opportunity to testify. I look | |
| forward to your questions. | |
| [all] | |
| </pre></body></html> | |